We analyze the behavior of experts who quote forecasts for monthly SKU-level sales data where we compare data before and after the moment that experts received different kinds of feedback on their behavior. We have data for 21 experts located in as many countries who make SKUlevel forecasts for a variety of pharmaceutical products for October 2006 to September 2007. We study the behavior of the experts by comparing their forecasts with those from an automated statistical program, and we report the forecast accuracy over these 12 months. In September 2007 these experts were given feedback on their behavior and they received a training at the headquarters' office, where specific attention was given to the ins and outs of the statistical program. Next, we study the behavior of the experts for the 3 months after the training session, that is, October 2007 to December 2007. Our main conclusion is that in the second period the experts' forecasts deviated less from the statistical forecasts and that their accuracy improved substantially.
{"title":"Do Experts' SKU Forecasts Improve after Feedback?","authors":"Rianne Legerstee, P. Franses","doi":"10.2139/ssrn.1934120","DOIUrl":"https://doi.org/10.2139/ssrn.1934120","url":null,"abstract":"We analyze the behavior of experts who quote forecasts for monthly SKU-level sales data where we compare data before and after the moment that experts received different kinds of feedback on their behavior. We have data for 21 experts located in as many countries who make SKUlevel forecasts for a variety of pharmaceutical products for October 2006 to September 2007. We study the behavior of the experts by comparing their forecasts with those from an automated statistical program, and we report the forecast accuracy over these 12 months. In September 2007 these experts were given feedback on their behavior and they received a training at the headquarters' office, where specific attention was given to the ins and outs of the statistical program. Next, we study the behavior of the experts for the 3 months after the training session, that is, October 2007 to December 2007. Our main conclusion is that in the second period the experts' forecasts deviated less from the statistical forecasts and that their accuracy improved substantially.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"41 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88034397","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine theoretically and empirically social interactions in labor markets and how policy prescriptions can change dramatically when there are social interactions present. Spillover effects increase labor supply and conformity effects make labor supply perfectly inelastic at a reference group average. The demand for a good may also be influenced by either a spillover effect or a conformity effect. Positive spillover increases the demand for the good with interactions, and a conformity effect makes the demand curve pivot to become less price sensitive. Similar social interactions effects appear in the associated derived demands for labor. Individual and community factors may influence the average length of poverty spells. We measure local economic conditions by the county unemployment rate and neighborhood spillover effects by the racial makeup and poverty rate of the county. We find that moving an individual from one standard deviation above the mean poverty rate to one standard deviation below the mean poverty rate (from the inner city to the suburbs) lowers the average poverty spell by 20–25 percent. We further consider overall labor market outcomes by examining theoretically the socially optimal wealth distribution. Interdependence in utility can mitigate the need to transfer wealth to low-wage individuals and may require them to be poorer by all objective measures. Finally, we quantify how labor market policy changes when there are household social interactions. Labor supply estimates indicate positive economically important spillovers for adult U.S. men. Ignoring or incorrectly considering social interactions can mis-estimate the labor supply response of tax reform in the United States by as much as 60 percent.
{"title":"Social Interactions in the Labor Market","authors":"Andrew Grodner, T. Kniesner, J. Bishop","doi":"10.1561/0700000045","DOIUrl":"https://doi.org/10.1561/0700000045","url":null,"abstract":"We examine theoretically and empirically social interactions in labor markets and how policy prescriptions can change dramatically when there are social interactions present. Spillover effects increase labor supply and conformity effects make labor supply perfectly inelastic at a reference group average. The demand for a good may also be influenced by either a spillover effect or a conformity effect. Positive spillover increases the demand for the good with interactions, and a conformity effect makes the demand curve pivot to become less price sensitive. Similar social interactions effects appear in the associated derived demands for labor. Individual and community factors may influence the average length of poverty spells. We measure local economic conditions by the county unemployment rate and neighborhood spillover effects by the racial makeup and poverty rate of the county. We find that moving an individual from one standard deviation above the mean poverty rate to one standard deviation below the mean poverty rate (from the inner city to the suburbs) lowers the average poverty spell by 20–25 percent. We further consider overall labor market outcomes by examining theoretically the socially optimal wealth distribution. Interdependence in utility can mitigate the need to transfer wealth to low-wage individuals and may require them to be poorer by all objective measures. Finally, we quantify how labor market policy changes when there are household social interactions. Labor supply estimates indicate positive economically important spillovers for adult U.S. men. Ignoring or incorrectly considering social interactions can mis-estimate the labor supply response of tax reform in the United States by as much as 60 percent.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"25 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83529475","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyses how corporate taxes can affect investment and productivity. To address this question the paper uses data from a set of 42 developing countries taken from the World Bank Business Environment Surveys and examines whether firms with different sizes are affected differently by taxation. We extend the analysis that has been carried out relating tax rates to investment into the analysis of the impact of taxation on total factor productivity. Investment and productivity are shown to respond negatively to an increase in the corporate tax rate. These effects are stronger in bigger firms.
{"title":"Corporate Taxation, Investment and Productivity: A Firm Level Estimation","authors":"Cristina Pombo, A. Galindo","doi":"10.2139/ssrn.1636044","DOIUrl":"https://doi.org/10.2139/ssrn.1636044","url":null,"abstract":"This paper analyses how corporate taxes can affect investment and productivity. To address this question the paper uses data from a set of 42 developing countries taken from the World Bank Business Environment Surveys and examines whether firms with different sizes are affected differently by taxation. We extend the analysis that has been carried out relating tax rates to investment into the analysis of the impact of taxation on total factor productivity. Investment and productivity are shown to respond negatively to an increase in the corporate tax rate. These effects are stronger in bigger firms.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75539143","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Is the observed large increase in consumer indebtedness since 1970 beneficial for U.S. consumers? This paper quantitatively investigates the macroeconomic and welfare implications of relaxing borrowing constraints using a model with preferences featuring temptation and self-control. The model can capture two contrasting views: the positive view, which links increased indebtedness to financial innovation and thus better consumption smoothing, and the negative view, which is associated with consumers' over-borrowing. The author finds that the latter is sizable: the calibrated model implies a social welfare loss equivalent to a 0.4 percent decrease in per-period consumption from the relaxed borrowing constraint consistent with the observed increase in indebtedness. The welfare implication is strikingly different from the standard model without temptation, which implies a welfare gain of 0.7 percent, even though the two models are observationally similar. Naturally, the optimal level of the borrowing limit is significantly tighter according to the temptation model, as a tighter borrowing limit helps consumers by preventing over-borrowing.
{"title":"Rising Indebtedness and Temptation: A Welfare Analysis","authors":"M. Nakajima","doi":"10.2139/ssrn.1927524","DOIUrl":"https://doi.org/10.2139/ssrn.1927524","url":null,"abstract":"Is the observed large increase in consumer indebtedness since 1970 beneficial for U.S. consumers? This paper quantitatively investigates the macroeconomic and welfare implications of relaxing borrowing constraints using a model with preferences featuring temptation and self-control. The model can capture two contrasting views: the positive view, which links increased indebtedness to financial innovation and thus better consumption smoothing, and the negative view, which is associated with consumers' over-borrowing. The author finds that the latter is sizable: the calibrated model implies a social welfare loss equivalent to a 0.4 percent decrease in per-period consumption from the relaxed borrowing constraint consistent with the observed increase in indebtedness. The welfare implication is strikingly different from the standard model without temptation, which implies a welfare gain of 0.7 percent, even though the two models are observationally similar. Naturally, the optimal level of the borrowing limit is significantly tighter according to the temptation model, as a tighter borrowing limit helps consumers by preventing over-borrowing.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"326 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80370211","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper provides an alternative approach in explaining current account imbalances within the euro area. The inability of the ECB to react to disparities in inflation and economic growth between EMU members results in persistent real interest rate differentials, which in turn cause divergent current accounts among EMU member states. Using Taylor rules we assess an optimal interest rate for each EMU member separately. The deviation between realized euro and optimal country-specific c interest rate, employed in a panel estimation, exhibits a significantly strong impact on current account imbalances and proves to be robust to various specifications.
{"title":"Current Account Imbalances in the Euro Area: The Role of Monetary Policy","authors":"Katja Hillmann, W. Wilde","doi":"10.2139/ssrn.1926062","DOIUrl":"https://doi.org/10.2139/ssrn.1926062","url":null,"abstract":"This paper provides an alternative approach in explaining current account imbalances within the euro area. The inability of the ECB to react to disparities in inflation and economic growth between EMU members results in persistent real interest rate differentials, which in turn cause divergent current accounts among EMU member states. Using Taylor rules we assess an optimal interest rate for each EMU member separately. The deviation between realized euro and optimal country-specific\u001cc interest rate, employed in a panel estimation, exhibits a significantly\u001c strong impact on current account imbalances and proves to be robust to various specifications.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"27 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82257828","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Forty years of low-intensity internal armed conflict has made Colombia home to the world's second largest population of Internally Displaced Persons (IDPs). The effect of being directly impacted by conflict on a child's educational accumulation and enrollment is of particular concern because of the critical role that education plays in increasing human capital and productivity. This paper explores the educational accumulation and enrollment gap created by being directly affected by conflict. First, we show that children living in municipality with high conflict have a gap in education enrollment and accumulation. However, this gap is much smaller than the attainment and enrollment gap for those directly affected by the conflict (IDPs). We estimate the education accumulation and enrollment gaps for IDPs in comparison to non-migrants and other migrants respectively. Our results suggest significant education accumulation and enrollment gaps for children of IDPs that widens to over half a year in secondary school. The disparity in effects when we focus on direct exposure to conflict versus living in a municipality with conflict suggests a need to be careful when using the latter to estimate the impact of conflict.
{"title":"Conflict and Its Impact on Educational Accumulation and Enrollment in Colombia: What We Can Learn from Recent IDPs","authors":"Kate Wharton, Ruth Uwaifo Oyelere","doi":"10.2139/ssrn.1922011","DOIUrl":"https://doi.org/10.2139/ssrn.1922011","url":null,"abstract":"Forty years of low-intensity internal armed conflict has made Colombia home to the world's second largest population of Internally Displaced Persons (IDPs). The effect of being directly impacted by conflict on a child's educational accumulation and enrollment is of particular concern because of the critical role that education plays in increasing human capital and productivity. This paper explores the educational accumulation and enrollment gap created by being directly affected by conflict. First, we show that children living in municipality with high conflict have a gap in education enrollment and accumulation. However, this gap is much smaller than the attainment and enrollment gap for those directly affected by the conflict (IDPs). We estimate the education accumulation and enrollment gaps for IDPs in comparison to non-migrants and other migrants respectively. Our results suggest significant education accumulation and enrollment gaps for children of IDPs that widens to over half a year in secondary school. The disparity in effects when we focus on direct exposure to conflict versus living in a municipality with conflict suggests a need to be careful when using the latter to estimate the impact of conflict.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75400185","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2011-09-01DOI: 10.1111/j.1467-629X.2010.00363.x
Z. Matolcsy, Anna Wright
The relation between CEO compensation and firm performance has been extensively documented in the literature to date. However, this relation has not been explored in a setting where CEO's, even in the same industry, receive either cash-based compensation only or cash-based and equity-based compensation. Australia provides such a setting. Our objective is twofold. First, we provide evidence on the performance of firms where CEO's receive cash-based compensation only versus the performance of firms where executives received equity-based compensation. Second, we estimate a model of 'efficient' compensation structure on the basis of firm characteristics, and test the performance consequences of deviation from the efficient compensation structure. Our results are based on 696 firm years for the period of 1999-2001. We have two key findings. First, we show that on average, firm performance does not differ between firms offering cash-based compensation only and those using both cash- and equity-based compensation. Second, we find some evidence that a firm's performance is lower when a firm is using the 'wrong' compensation structure. We test the sensitivity results with respect to alternative sub-samples and variable specifications, but our results remain the same. Overall, our study provides some important new insight into the links between CEO compensation and firm performance.
{"title":"CEO Compensation Structure and Firm Performance","authors":"Z. Matolcsy, Anna Wright","doi":"10.1111/j.1467-629X.2010.00363.x","DOIUrl":"https://doi.org/10.1111/j.1467-629X.2010.00363.x","url":null,"abstract":"The relation between CEO compensation and firm performance has been extensively documented in the literature to date. However, this relation has not been explored in a setting where CEO's, even in the same industry, receive either cash-based compensation only or cash-based and equity-based compensation. Australia provides such a setting. Our objective is twofold. First, we provide evidence on the performance of firms where CEO's receive cash-based compensation only versus the performance of firms where executives received equity-based compensation. Second, we estimate a model of 'efficient' compensation structure on the basis of firm characteristics, and test the performance consequences of deviation from the efficient compensation structure. Our results are based on 696 firm years for the period of 1999-2001. We have two key findings. First, we show that on average, firm performance does not differ between firms offering cash-based compensation only and those using both cash- and equity-based compensation. Second, we find some evidence that a firm's performance is lower when a firm is using the 'wrong' compensation structure. We test the sensitivity results with respect to alternative sub-samples and variable specifications, but our results remain the same. Overall, our study provides some important new insight into the links between CEO compensation and firm performance.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"71 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83337355","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2011-09-01DOI: 10.1111/j.1740-1461.2011.01217.x
J. Donohue, M. Stein, Christopher L. Griffin, Jr., Sascha S. Becker
In this article, we offer innovative analysis and additional evidence on the relationship between the Americans with Disabilities Act ("ADA") and the relative labor market outcomes for people with disabilities, the very class protected by its landmark provisions. Using individual-level longitudinal data from 1981 to 1996 derived from the previously unexploited Panel Study of Income Dynamics ("PSID"), we examine the possible effect of the ADA on (1) annual weeks worked; (2) annual earnings; and (3) hourly wages for a sample of 7120 unique male household heads between the ages of 21 and 65 as well as a subset of 1147 individuals appearing every year from 1981 to 1996. Our analysis of the larger sample suggests the ADA had a negative impact on the employment levels of disabled persons relative to non-disabled persons but no impact on relative earnings. However, our evaluation of the restricted sample raises questions about these findings. Using these data, we find little evidence of adverse effects on weeks worked but strong evidence of wage declines for the disabled, albeit declines beginning in 1986, well before the ADA's passage. These results therefore cast doubt on the adverse ADA-related impacts found in previous studies, particularly Acemoglu and Angrist (2001). The conflicting narratives that emerge from our analysis shed new light on, but also counsel caution in reaching final conclusions about, the impact of the ADA on employment outcomes for people with disabilities.
{"title":"Assessing Post‐ADA Employment: Some Econometric Evidence and Policy Considerations","authors":"J. Donohue, M. Stein, Christopher L. Griffin, Jr., Sascha S. Becker","doi":"10.1111/j.1740-1461.2011.01217.x","DOIUrl":"https://doi.org/10.1111/j.1740-1461.2011.01217.x","url":null,"abstract":"In this article, we offer innovative analysis and additional evidence on the relationship between the Americans with Disabilities Act (\"ADA\") and the relative labor market outcomes for people with disabilities, the very class protected by its landmark provisions. Using individual-level longitudinal data from 1981 to 1996 derived from the previously unexploited Panel Study of Income Dynamics (\"PSID\"), we examine the possible effect of the ADA on (1) annual weeks worked; (2) annual earnings; and (3) hourly wages for a sample of 7120 unique male household heads between the ages of 21 and 65 as well as a subset of 1147 individuals appearing every year from 1981 to 1996. Our analysis of the larger sample suggests the ADA had a negative impact on the employment levels of disabled persons relative to non-disabled persons but no impact on relative earnings. However, our evaluation of the restricted sample raises questions about these findings. Using these data, we find little evidence of adverse effects on weeks worked but strong evidence of wage declines for the disabled, albeit declines beginning in 1986, well before the ADA's passage. These results therefore cast doubt on the adverse ADA-related impacts found in previous studies, particularly Acemoglu and Angrist (2001). The conflicting narratives that emerge from our analysis shed new light on, but also counsel caution in reaching final conclusions about, the impact of the ADA on employment outcomes for people with disabilities.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"57 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72887955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2011-09-01DOI: 10.1111/j.1467-9396.2011.00971.x
Gabriel Felbermayr, B. Jung
The business literature and recent descriptive evidence show that exporting rms typically require the help of foreign trade intermediaries or need to set up own foreign wholesale aliates. In contrast, conventional trade theory models assume that producers can directly access foreign consumers. This paper introduces intermediaries in an international trade model where producers dier with respect to productivity as well as regarding their varieties’ perceived quality and tradability. We assume that trade intermediation is prone to frictions due to the absence of enforceable cross-country contracts while own wholesale subsidiaries require capital investment. We derive the sorting pattern of rms according to their degree of competitive advantage and show how the relative prevalence of intermediation depends on the degree of heterogeneity among producers, on the importance of market-specicity of goods, or on expropriation risk. We use US export data for 50 sectors and 133 destination countries to check the empirical validity of this predictions and nd robust empirical support.
{"title":"Trade Intermediation and the Organization of Exporters","authors":"Gabriel Felbermayr, B. Jung","doi":"10.1111/j.1467-9396.2011.00971.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2011.00971.x","url":null,"abstract":"The business literature and recent descriptive evidence show that exporting rms typically require the help of foreign trade intermediaries or need to set up own foreign wholesale aliates. In contrast, conventional trade theory models assume that producers can directly access foreign consumers. This paper introduces intermediaries in an international trade model where producers dier with respect to productivity as well as regarding their varieties’ perceived quality and tradability. We assume that trade intermediation is prone to frictions due to the absence of enforceable cross-country contracts while own wholesale subsidiaries require capital investment. We derive the sorting pattern of rms according to their degree of competitive advantage and show how the relative prevalence of intermediation depends on the degree of heterogeneity among producers, on the importance of market-specicity of goods, or on expropriation risk. We use US export data for 50 sectors and 133 destination countries to check the empirical validity of this predictions and nd robust empirical support.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91138009","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The aggregate neoclassical growth model - with means-tested subsidies whose replacement rates began rising at the end of 2007 as its only impulse - produces time series for aggregate labor usage, consumption, investment, and real GDP that closely resemble actual U.S. time series. Despite having no explicit financial market, the model has investment fall steeply during the recession not because of any distortions with the supply of capital, but merely because labor is falling and labor is complementary with capital in the production function. Through the lens of the model, the fact that real consumption fell significantly below trend during 2008 suggests that labor usage per capita is expected to remain well below pre-recession levels for several years.
{"title":"Means-Tested Subsidies and Economic Performance Since 2007","authors":"C. Mulligan","doi":"10.3386/W17445","DOIUrl":"https://doi.org/10.3386/W17445","url":null,"abstract":"The aggregate neoclassical growth model - with means-tested subsidies whose replacement rates began rising at the end of 2007 as its only impulse - produces time series for aggregate labor usage, consumption, investment, and real GDP that closely resemble actual U.S. time series. Despite having no explicit financial market, the model has investment fall steeply during the recession not because of any distortions with the supply of capital, but merely because labor is falling and labor is complementary with capital in the production function. Through the lens of the model, the fact that real consumption fell significantly below trend during 2008 suggests that labor usage per capita is expected to remain well below pre-recession levels for several years.","PeriodicalId":11485,"journal":{"name":"Econometrics: Applied Econometrics & Modeling eJournal","volume":"34 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2011-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79040274","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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