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Working Paper
U. S. regional business cycles and the natural rate of unemployment
Estimates of the natural rate of unemployment are important in many macroeconomic models used by economists and policy advisors. This paper shows how such estimates might benefit from closer attention to regional developments. Regional business cycles do not move in lockstep and greater dispersion among regions can affect estimates of the natural rate of unemployment. There is microeconomic evidence that employers are more reluctant to cut wages than they are to raise them. Accordingly, this means that the relationship between wage inflation and vacancies is convex: an increase in vacancies ...
Journal Article
The effects of recessions across demographic groups
The burdens of a recession are not spread evenly across demographic groups. As the public and media noticed, from the start of the current recession in December 2007 through June 2009 men accounted for more than three-quarters of net job losses. Other differences have garnered less attention but are just as interesting. During the same period, the employment of single people fell at more than twice the rate that it did for married people and the decline for black workers was one and a half times that for white workers. To provide a more complete understanding of the effect of recessions, this ...
Journal Article
Need and the need for favors motivate foreign aid decisions
Bermuda gets $46,000 a year, while Iraq receives $2.3 billion. What motivates donors to give aid to other countries? Need-and the need for favors.
Journal Article
The determinants of aid in the post-cold war era
The authors estimate the responsiveness of aid to recipient countries' economic and physical needs, civil/political rights, and government effectiveness. They look exclusively at the post-Cold War era and use fixed effects to control for the political, strategic, and other considerations of donors. They find that aid and per capita income have been negatively related, while aid has been positively related to infant mortality, rights, and government effectiveness.
Working Paper
Endogenous export subsidies and welfare under domestic cost heterogeneity
We present a model of Cournot rivalry where domestic and foreign firms compete in a third-country market, and where the domestic export subsidy is determined by lobbying. Greater domestic cost heterogeneity (a mean-preserving spread of the marginal costs of the domestic firms) means that the subsidy level, aggregate domestic output, and domestic market share will all be higher. However, the effect of heterogeneity on domestic welfare is ambiguous. From a near-symmetric initial situation, greater domestic cost-heterogeneity reduces domestic welfare if the number of domestic firms exceeds some ...
Journal Article
To bear, or not to bear: is that an economics question?
Weighing the costs vs. the benefits of having children may seem like a cold-blooded exercise. Yet such an analysis can help us understand not only such private decisions but public policies, too.
Journal Article
Price stability and the rising tide: how low inflation lifts all ships
The low and stable inflation that the Fed has relentlessly pursued over the past decade or so has buoyed virtually all demographic groups, enabling most Americans to do a lot more than just keep their heads above water.
Working Paper
Gravity model specification and the effects of the Canada-U.S. border
There is a well-established literature finding that the Canada-U.S. border has a large dampening effect on trade, is asymmetric, and differs across provinces. In this paper, I demonstrate that the standard gravity model used to obtain these results provides biased estimates of the volume of trade. I attribute this to heterogeneity bias and reestimate the effects of the border using a gravity model that allows for heterogeneous gravity equations. Doing so does not alter the general results of existing studies, although it does yield a border effect that is 40 percent larger, reverses the ...
Working Paper
Policy evaluation in the presence of outsourcing: global competitiveness versus political feasibility
We analyze the effects of outsourcing in the presence of a minimum wage by presenting a general-equilibrium model with an oligopolistic export sector and a competitive import-competing sector. An outsourcing tax is politically popular because it switches jobs to unemployed natives. It is also economically sound because it raises national income. An export subsidy may or may not be justified on welfare grounds. Increased international competition has no effect on the level of outsourcing, but the direction of its effect on unemployment and national income depends on the relative factor ...
Working Paper
Ethnic networks and trade: intensive vs. extensive margins
Ethnic networks?as proxies for information networks?have been associated with higher levels of international trade. Previous research has not differentiated between the roles of these networks on the extensive and intensive margins. The present paper does so using a model with fixed effects, finding that ethnic networks increase trade on the intensive margin but not on the extensive margin.