I study how teachers’ assigned job tasks—the practices they are asked to use in the classroom—affect the returns to math skills in teacher productivity. The results demonstrate the importance of distinguishing between workers’ skills and job tasks. I examine a randomized trial of different approaches to teaching math, each codified in a set of day-to-day tasks. Teachers were tested to measure their math skills. Teacher productivity—measured by student test scores—is increasing in math skills when teachers use conventional “direct instruction”: explaining and modeling rules and procedures. The relationship is weaker, perhaps negative, for newer “student-led” methods.

We propose a model in which banks are exposed to the risk of contagion through their portfolio of loans. We show that a solvency problem in one bank can be transmitted to another if they lend to the same borrower. The novelty is that the channel for the transmission involves banks’ monitoring incentives. The intensity with which all banks monitor a common borrower is reduced when one of the banks suffers a solvency shock. The reduced effort intensity affects the borrower's probability of success and creates a contagion (endogenous correlation) from the balance-sheet of the affected bank to the balance-sheet of the other banks lending to the same borrower. Banks hit by a solvency shock have lower incentives to monitor borrowers because less is left after paying depositors. Banks not hit by a solvency shock face borrowers’ risks entirely on their own, which increases the expected cost of lending. As a consequence, they respond by reducing the monitoring intensity for the common borrower. Bank equity can mitigate the risk of contagion.

Abstract We derive closed-form solutions for asset prices and portfolio holdings when agents have asset-specific information and/or information about common components that affect many assets. Our solutions are general, encompass existing information structures, and are used to analyze new structures. A given investor’s portfolio can exhibit highly disperse holdings—e.g., portfolio weights may vary significantly from market capitalization weights. Our model also generates large ranges of asset prices due to information asymmetries. We help explain why US investors (e.g.) may underweight German stocks (e.g.) on average, but overweight a particular German stock relative to its market capitalization weight.

This paper analyzes various channels of shock transmission in an economy subject to financial frictions, by incorporating liquidity and default effects on asset prices. We develop a framework in which we can assess financial stability policy by introducing a simplified model of exchange and financial intermediation that captures the effects of shocks on financial and real sectors of the economy. The model allows us to explain essential mechanisms and interactions of financial and real economic variables in a comprehensive, yet intuitive fashion. Our results suggest that liquidity and default in the credit markets should be analyzed contemporaneously when financial, monetary and productivity shocks affect financial stability as well as the real economy.

Using data on bank holding companies in the United States and Europe, this paper analyses the impact of capital and liquidity on bank-lending-growth following the 2008 financial crisis, and the new measures inspired by the Basel III regulatory framework. We find that U.S. banks reinforce their risk absorption capacities when expanding their credit activities. Capital ratios have significant, negative impacts on bank-retail-and-other-lending-growth for large European banks in the context of deleveraging and the “credit crunch” in Europe over the post-2008 financial crisis period. Additionally, liquidity indicators have positive but perverse effects on bank-lending-growth, which supports the need to consider heterogeneous banks’ characteristics and behaviors when implementing new regulatory policies.

Abstract Using a large sample of US individuals, we show that individuals with higher levels of trust have lower likelihoods of default in household debt and higher net worth. The effect is driven by trust values inherited from cultural and family backgrounds more than by trust beliefs about others. We demonstrate a causal impact of trust on financial outcomes by extracting the component of trust correlated with early-life experiences. The effect of trust is more pronounced among females, those with lower education, lower income, lower financial literacy, and higher debt-to-income ratio. Further evidence suggests that enhancing individuals’ trust, to the right amount, can improve household financial well-being.

I describe and compare sources of data on citations in economics and the statistics derived from them. Constructing data sets of the post-publication citation histories of articles published in the “top five” journals in the 1970s and 2000s, I examine distributions and life cycles of citations, compare citation histories of articles in different subspecialties in economics, and present evidence on the history and heterogeneity of those journals' impacts and the marginal citation productivity of additional coauthors. I use a new data set of the lifetime citation histories of over 1,000 economists from thirty universities to rank economics departments by various measures and demonstrate the importance of intra- and interdepartmental heterogeneity in productivity. Throughout, the discussion summarizes earlier work, including the impacts of citations on salaries and nonmonetary rewards, and how citations reflect judgments about research quality in economics and the importance of economic ideas. (JEL A14, I23)

Residential segregation by race and income are enduring features of urban America. Understanding the effects of residential segregation on educational attainment, labor market outcomes, criminal activity, and other outcomes has been a leading project of the social sciences for over half a century. This paper describes techniques for measuring the effects of neighborhood of residence on long-run life outcomes. ( JEL C51, I24, J15, K42, R23)

We study a firm’s manager’s voluntary disclosure decisions and those disclosure decisions’ asset pricing, cost of capital, and information transfer effects in a model where investors trade multiple securities. We: develop new asset pricing formulas when the manager makes no disclosure that impose testable cross-equation restrictions on firms’ market values; develop a wide array of comparative statics; obtain surprising findings about nondisclosure’s effects on investors’ perceptions of uncertainty about firms’ future cash flows; develop simple, interpretable expressions for firms’ cost of capital; and show how no disclosure by one firm generates informational externalities on other firms.

Retail banking is a complex industry in which depository institutions bundle various services and may have market power. We use a recent regulation as a natural experiment to provide broad evidence about competition and the importance of bundling in retail banking. That regulation, which resulted from the Durbin Amendment to the Dodd–Frank Act, capped debit card interchange fees for banks with over 10 billion in assets. Using a difference-in-differences identification strategy, we document and quantify the resulting decline in interchange income for treated banks. We further find that treated banks offset more than 90% of the lost interchange income through increases in deposit fees for account holders. We argue that the ability to adjust deposit fees indicates (i) that treated banks have market power with respect to their account holders and (ii) strong complementarity between debit card transactions and deposit accounts. These results are robust when limiting the sample to banks near the asset threshold or using control banks with low direct competition with treated banks. Treated banks neither reduced costs nor strategically avoided the 10 billion threshold.