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Symmetric inflation risk
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Subject to revision
Journal Article
A case study of a currency crisis: the Russian default of 1998
This paper uses a currency crisis framework to analyze the currency devaluation and debt default of post-Soviet Russia in August 1998. The authors show that even though the Russian economy recorded positive growth immediately preceding the default, the atmosphere was reflective of an impending crisis. The authors then consider the symptoms of a currency crisis?specifically public and private debt responsibilities, devaluation expectations, and contractionary monetary policy?and show that they were present in Russia at that time. Three generations of currency crisis models are reviewed, ...
Journal Article
Financial aid and college choice
Journal Article
Monetary policy: the whole country gets the same treatment, but results vary
The target set by the FOMC for the federal funds rate applies to the entire country. But that single policy has a different impact on different parts of the country, depending on their concentration of interest-sensitive industries.
Journal Article
Putting off retirement: the rise of the 401(k)
Journal Article
Nonlinear effects of school quality on house prices
We reexamine the relationship between quality of public schools and house prices and find it to be nonlinear. Unlike most studies in the literature, we find that the price premium parents must pay to buy a house in an area associated with a better school increases as school quality increases. This is true even after controlling for neighborhood characteristics, such as the racial composition of neighborhoods, which is also capitalized into house prices. In contrast to previous studies that use the boundary discontinuity approach, we find that the price premium from school quality remains ...
Journal Article
Low unemployment: old dogs or new tricks?
Technology usually gets the credit for the unusually low unemployment of the not-too-distant past. But baby boomers, with all their years' experience, also played a role.
Journal Article
Subjective probabilities: psychological theories and economic applications
Abbigail J. Chiodo, Massimo Guidolin, Michael T. Owyang, and Makoto Shimoji> Real-life decisionmakers are often forced to estimate the likelihood of uncertain future events. Usually, economists assume that these agents behave in a fully rational manner, employing statistical rules to assess probabilities, and that they maximize expected utility. Psychological studies, however, have shown that people do not tend to behave as rational models would predict. The authors review three rules of thumb taken from the psychology literature that people rely on when assessing the likelihood of uncertain ...
Working Paper
Nonlinear hedonics and the search for school district quality
A school?s quality is often inferred from the premium a parent must pay to buy a house associated with a better school. Isolating this effect, however, is difficult because better schools also tend to be located in nicer neighborhoods and, therefore, cost more for reasons other than school quality. Although recent work has been relatively successful in isolating this effect, it is limited to the extent that it assumes a linear effect of schools on housing prices. We examine this relationship and find that the premium for school quality is nonlinear: There is a premium for houses in better ...