The Great Recession has had long-lasting effects on credit markets, employment, and output. This column combines a model with macroeconomic data to measure how the recession has changed beliefs about the possibility of future crises. According to the model, the estimated change in sentiment correlates with economic activity. A short-lived financial crisis can trigger long-lived shifts in expectations, which in turn can trigger secular stagnation.
Julian Kozlowski, Laura Veldkamp, Venky Venkateswaran, 11 September 2016
Francesco D'Acunto, 20 September 2015
Research consistently finds that men are more risk tolerant, or even risk loving, than women. This column argues that social identity, next to biology, helps explain the stark difference in risk attitudes and beliefs across genders. Men to whom identity is salient become more risk tolerant and invest more often and with more money. Identity makes men overconfident but its effects decrease with age. This is consistent with the notion that gender stereotypes have become less stark over the last decades.
Roland Bénabou, Davide Ticchi , Andrea Vindigni, 19 April 2015
History offers many examples of the recurring tensions between science and organized religion, but as part of the paper’s motivating evidence we also uncover a new fact: in both international and cross-state U.S. data, there is a significant and robust negative relationship between religiosity and patents per capita. Three long-term outcomes emerge. First, a "Secularization" or "Western-European" regime with declining religiosity, unimpeded science, a passive Church and high levels of taxes and transfers. Second, a "Theocratic" regime with knowledge stagnation, extreme religiosity with no modernization effort, and high public spending on religious public goods. In-between is a third, "American" regime that generally (not always) combines scientific progress and stable religiosity within a range where religious institutions engage in doctrinal adaptation.
Alberto Cavallo, Guillermo Crucas, Ricardo Perez-Truglia, 10 November 2014
Although central banks have a natural desire to influence household inflation expectations, there is no consensus on how these expectations are formed or the best ways to influence them. This column presents evidence from a series of survey experiments conducted in a low-inflation context (the US) and a high-inflation context (Argentina). The authors find that dispersion in household expectations can be explained by the cost of acquiring and interpreting inflation statistics, and by the use of inaccurate memories about price changes of specific products. They also provide recommendations for central bank communication strategies.
Francesco Giavazzi, Ivan Petkov, Fabio Schiantarelli, 16 June 2014
The persistence of cultural attitudes is an important determinant of the success of institutional reforms, and of the impact of immigration on a country’s culture. This column presents evidence from a study of European immigrants to the US. Some cultural traits – such as deep religious values – are highly persistent, whereas others – such as attitudes towards cooperation and redistribution – change more quickly. Many cultural attitudes evolve significantly between the second and fourth generations, and the persistence of different attitudes varies across countries of origin.