A pressing issue facing policymakers around the globe today is how to generate long-term economic growth through technological innovation. Using a new dataset that matches 19th and 20th century patent records with census data, this column attempts to shed some light on the ‘golden age’ of US innovation. Population density and financial development are found to be important determinants of state innovativeness, while education appears to be the critical input at the individual level. These findings have important implications for innovation policy today.
Ufuk Akcigit, John Grigsby, Tom Nicholas, 02 February 2017
Christopher Boone, Arindrajit Dube, Lucas Goodman, Ethan Kaplan, 08 January 2017
The Unemployment Insurance programme in the US was significantly expanded during between 2008 and 2014. This column examines the effect of unemployment insurance duration on aggregate employment during the Great Recession using state-level expansions and contractions in insurance generosity. It finds a positive but not statistically significant employment impact of expanding the insurance. This suggests that the substantial insurance value of the extensions during the Great Recession was not offset in any meaningful way by any costs from weaker job growth.
Susan Helper, Jennifer Kuan, 20 December 2016
Innovation is often associated with a few visionaries working in new and dynamic industries. In practice, however, critical innovation occurs daily at many points throughout a supply chain. This column uses recent survey data to examine innovation in the US automotive supply chain. Process innovations can have major downstream benefits, and ‘collaborative creativity’ between suppliers and customers is found to be critical in innovation efforts. US automakers should focus on strengthening ties with their suppliers in order to remain competitive.
Konrad Burchardi, Thomas Chaney, Tarek Hassan, 12 November 2016
The economic effects of the unprecedented levels of international migrations over the past few years are at the centre of political debates about immigration policy. This column evaluates the causal effect of migration on foreign direct investment using immigration patterns to the US going back to the 19th century. Foreign direct investment is found to follow the paths of historical migrants as much as it follows differences in productivity, tax rates, and education. The results suggest a mechanism of information flow facilitation, and that the effect of ancestry on foreign direct investment is very long-lasting.
Gary Hufbauer, Euijin Jung, 29 September 2016
Donald Trump has consistently made headlines with unusual and potentially dangerous economic policy proposals, including threatening to pull out of the WTO, renegotiating trade agreements, and imposing tariffs on imports from Mexico and China. This column explores the legal and economic dimensions of these proposals. Old and modern legal statutes could allow a US president to implement such policies, and the repercussions for the US economy could be severely negative.
Giovanni Dell'Ariccia, Luc Laeven, Gustavo Suarez, 02 August 2016
The Global Crisis has renewed debate about the relationship between short-term interest rates and bank risk taking. Theory offers ambiguous and conflicting predictions. This column explores the relationship using confidential bank-level data from the US. Bank risk taking is found to be negatively associated with short-term interest rates, and this is more pronounced for highly capitalised banks. These findings can help inform the design of monetary policy.
Alberto Galasso, Hong Luo, 24 July 2016
‘Defensive medicine’ refers to doctors performing excessive tests and procedures because of concerns about potential malpractice liability. Advocates for reform of the liability system typically argue that this raises healthcare costs with few expected benefits for patients. This column explores how tort reform laws designed to curb defensive medicine affect innovation in medical devices. US states that introduce such laws see a reduction in medical device patenting, suggesting that high liabilities actually encourage innovation.
Christian Catalini, Christian Fons-Rosen, Patrick Gaulé, 16 July 2016
Scientific research is increasingly the product of collaborations between researchers. One driver of this trend over the last half century has been falling communication costs. This column uses data on faculty members of chemistry departments in the US to explore whether the reduction in air travel costs over the last three decades has had a similar effect on scientific collaboration. The introduction of a low-cost carrier route is associated with a 50% increase in collaborations between researchers.
Laurence Kotlikoff, 16 December 2012
A ‘self-fulfilling recession’ is a long-established idea in economics. This column argues that the US’s economic malaise continues to be caused by leaders’ hysteria rather than by actual engrained economic problems. Obama and Congress need to stop scaring the nation about the ‘fiscal cliff’ because, ultimately, they are coordinating expectations on there being a recession. Tackling the right policies now, and sending out the right message, will help more than hysteria.
Rebecca Blank, 01 August 2008
Major welfare reform legislation passed the US Congress in August 1996 by a broad bipartisan majority and was signed into law by President Clinton. Rebecca Blank of the University of Michigan talks to Romesh Vaitilingam about how US welfare reform has worked out – the successes and the downside – and where it goes next, including comparable policies in Europe. The interview was recorded at the American Economic Association meetings in New Orleans in January 2008.
James Heckman, Paul LaFontaine, 13 February 2008
Official statistics for US high school graduation rates mask a growing educational divide. This column presents research showing that a record number of Americans are going to university – while an increasing number are dropping out of high school. This poses major social challenges for the United States.