Xuepeng Liu, Huimin Shi, 11 July 2019

The US-China trade war has continued for almost a year, but its effectiveness in preventing some Chinese origin products reaching the US may not be as great as it seems. This column shows how trade re-routing has been used in the past to circumvent antidumping duties in the context of trade tariffs. Firms may be able to avoid tariffs by sending their products to a third country, where the goods are reissued certificates of origin and then sent to the final destination country without being subject to the same tariffs.

Fariha Kamal, 07 July 2019

‘Factoryless’ goods producing entities outsource physical transformation activities while retaining ownership of the intellectual property and control of sales to customers. Using 2012 data from the US Census Bureau, this column provides a new conceptual definition of factoryless activity. It also compares factoryless goods producer firms to service providers outside the manufacturing sector, and hybrid manufacturers to traditional manufacturers within the manufacturing sector. The analysis reveals several meaningful correlations between factoryless status at the firm level and conceptual variables such as employment mix, innovation, and importing activities.

William H. Dow, Anna Godøy, Chris Lowenstein, Michael Reich, 07 July 2019

Policymakers and researchers have sought to understand the causes of and effective policy responses to recent increases in mortality due to alcohol, drugs, and suicide in the US. This column examines the role of the minimum wage and the earned income tax credit – the two most important policy levers for raising incomes for low-wage workers – as tools to combat these trends. It finds that both policies significantly reduce non-drug suicides among adults without a college degree, and that the effect is stronger among women. The findings point to the role of economic policies as important determinants of health. 

Ufuk Akcigit, Sina T. Ates, 04 July 2019

The US economy has witnessed a number of striking trends that indicate rising market concentration and a slowdown in business dynamism in recent decades. This column uses a micro-founded model of endogenous firm dynamics to show that a decline in the intensity of knowledge diffusion from frontier firms to laggard ones plays a key role in the observed shifts. It presents new evidence on higher concentration of patenting in the hands of firms with the largest stock that corroborates declining knowledge diffusion in the economy. 

Raquel Fernández, Sahar Parsa, 20 June 2019

Over the last few decades, there has been a large change in public opinion towards same-sex relationships.It has been argued that to drive such a change in public attitudes, a ‘shock’ of some kind is needed. This column examines the change in attitudes in the US towards same-sex relationships in relation to the AIDS epidemic. It shows that the change is indeed greater in those states most exposed to the AIDS epidemic, although only women reacted significantly to the AIDS rate in the 1990s.

David Abrams, Roberto Galbiati, Emeric Henry, Arnaud Philippe, 05 June 2019

The rule of law in advanced democracies is based on the assumption that the law and its application are the same for all citizens. But research has shown that judges respond to ideology or political biases in their sentencing decisions. This column examines how location can also influence criminal court sentences using data from the US state of North Carolina’s superior court system. It shows that, even after controlling for characteristics of judges, sentencing varies by location and responds to local norms.

Philipp Ager, Leah Boustan, Katherine Eriksson, 01 June 2019

One striking feature of many underdeveloped societies is that economic power is concentrated in the hands of very small powerful elites. This column explores why some elites show remarkable persistence, even after major economic disruptions, using the American Civil War’s effect on the Southern states. Analysis of census data shows that when the abolition of slavery threatened their economic status, Southern elites invested in their social networks, which helped them to recoup their losses fairly quickly.

Michael Keane, 26 May 2019

Launched in 2006, Medicare Part D allows beneficiaries to enrol in subsidised drug coverage plans sold by private insurers, but navigating the different plans can be complex and lead to sub-optimal choices. This column uses Medicare administrative data for 2006-2010 to understand the quality of consumer decision-making in the Part D marketplace. It finds that the vast majority of elderly place too much weight on premiums relative to out-of-pocket costs, care a great deal about the particular combination of plan features, and are highly likely to choose the same plan every year regardless of changes in prices and alternatives.

Roger Farmer, Giovanni Nicolò, 20 May 2019

The economies of many countries are operating close to full capacity, but unemployment and inflation are both low. Using data from the US, UK and Canada, this column compares differences in the macroeconomic behaviour of real GDP, the inflation rate and the yields on three-month Treasury securities in the three countries. It shows that the Farmer monetary model, closed with a belief function, outperforms the New Keynesian model, closed with the New Keynesian Phillips curve. The data fit the multiple equilibria emphasised in the Farmer model well, rather than the mean-reverting processes assumed by the New Keynesian model. 

Margherita Borella, Mariacristina De Nardi, Fang Yang, Douglas Clement, 17 May 2019

Behind the headline economic growth in the US over the last five decades lie clear patterns of widening wealth inequality. This column shows that white, less-educated Americans born in the 1960s are worse off than the generation born 20 years previously, based on wage changes, increased medical costs, and shorter life expectancy. This disparity could be worth as much as $132,000.

Philipp Ager, Benedikt Herz, 16 May 2019

The transition from high to low fertility rates is regarded as one of the most important determinants of sustainable long-run growth. But despite its importance, there is still an ongoing debate about its causes and timing. This column demonstrates that a sustained shift from agriculture to manufacturing contributed to the fertility decline in the American South at the turn of the 20th century. 

Pascal Michaillat, Emmanuel Saez, 13 May 2019

Academics and policymakers alike have debated how to structure an optimal stimulus package since the Great Recession. This column revisits the arguments related to the size of the multiplier and the usefulness of public spending, and offers a blueprint for future stimulus packages. It finds that the relationship between the multiplier and stimulus spending is hump-shaped, and that a well-designed stimulus package should depend on the usefulness of public expenditure. The output multiplier is not a robust statistic to use, and instead the ‘unemployment multiplier’ should be used. 

Jeremy Bulow, 09 May 2019

Bank stress tests in the US were an important tool for bailing out banks in the Great Recession. As this column points out, however, because the tests use regulatory rather than market measures of asset values and risk they have almost nothing to do with whether a bank will be economically solvent under test conditions. This column argues that the thousands of pages of post-crisis bank regulation have largely ignored perhaps the two most needed reforms: measuring asset values and risks in an economically realistic way. Reforming the stress tests is necessary for clearly and credibly placing responsibility for future banking losses in the private sector and for improving incentives for both managing old risks and for investing in new ones. 

Nicholas W. Papageorge, Victor Ronda, Yu Zheng, 04 May 2019

Socio-emotional skills are generally believed to improve labour market outcomes. Using British and US longitudinal datasets, this column studies externalising behaviour – usually linked to aggression and hyperactivity – and internalising behaviour – linked to anxiety and depression – and how they relate to an individual’s earnings over the long term. It shows that for both genders, externalising behaviour lowers educational attainment but is associated with higher earnings.

Franck Portier, 03 May 2019

Business economists argue that the length of an expansion is a good indicator of when a recession will hit. Using both parametric and non-parametric measures, this column finds strong support for the theory from post-WWII data on the US economy. The findings suggest there is good reason to expect a US recession in the next two years.

Wolfram Schlenker, Charles Taylor, 02 May 2019

Understanding beliefs about climate change is important, but most of the measures used in the literature are unreliable. Instead, this column uses prices of financial products whose payouts are tied to future weather outcomes in the US. These market expectations correlate well with climate model outputs between 2002 and 2018 and observed weather data across eight US cities, and show significant warming trends. When money is at stake, agents are accurately anticipating warming trends in line with the scientific consensus of climate models.

Wilko Bolt, Kostas Mavromatis, Sweder Van Wijnbergen, 25 April 2019

Increasing protectionism will slow down world trade and may dampen global economic growth. This column examines the global macroeconomic consequences of a major trade conflict between the US and China, and shows that the two countries would be the biggest losers from a 10% ‘tit-for-tat’ trade war between them. As long as it does not get involved in the conflict, the euro area may temporally gain from trade diversion, as competitiveness improves and imports from regions whose exports are blocked elsewhere become cheaper.

Maggie R. Jones, 25 April 2019

Nearly 40% of documented new arrivals to the US in 2005 left within ten years, but who return migrates and why is often overlooked in policy debates regarding immigration. This column uses survey data and earnings records from 2005 to 2015 to show that a decline in earnings is a strong predictor of return migration. Those who stayed for the decade saw their wages reach parity with native-born workers, while those who left had seen a steep decline in wages in the years before departure. Further analysis shows that highly educated immigrants are more likely to leave the US within a decade of arrival.

Thiemo Fetzer, Carlo Schwarz, 23 April 2019

Tariff retaliation is widely believed to be politically motivated. This column presents evidence that retaliation against the Trump administration's tariff hikes seems to be systematically targeted against the Republican voter base. China appears to have been able to achieve a high degree of political targeting but likely harmed its own economy by targeting agricultural goods for which the US is a major supplier. The EU, on the other hand, appears to be more successful in navigating the trade-off. It also finds some evidence suggesting that Republican candidates fared worse in the mid-term elections in the US counties most exposed to retaliation.

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