Which policies are protectionist and which ones are not? The Lerner Symmetry Theorem establishes that import tariffs and export taxes are equally protectionist. In this paper we provide a modern treatment of this classical result, highlighting the importance of multinational firms, global imbalances, and imperfect competition. Under perfect competition, the result follows from the separability of consumption and production across countries, ruling out tourism and some forms of multinational firms, but not others. Though we do not require trade balance, the role of initial assets is subtle: our result rules out foreign ownership of domestic assets, but does not constrain domestic ownership of foreign assets. Under imperfect competition, our result effectively rules out all multinational firms. We conclude by discussing the implications for border adjustment taxes. (JEL D41, D43, F13, F14, F23)
{"title":"Lerner Symmetry: A Modern Treatment","authors":"Arnaud Costinot, I. Werning","doi":"10.1257/AERI.20170006","DOIUrl":"https://doi.org/10.1257/AERI.20170006","url":null,"abstract":"Which policies are protectionist and which ones are not? The Lerner Symmetry Theorem establishes that import tariffs and export taxes are equally protectionist. In this paper we provide a modern treatment of this classical result, highlighting the importance of multinational firms, global imbalances, and imperfect competition. Under perfect competition, the result follows from the separability of consumption and production across countries, ruling out tourism and some forms of multinational firms, but not others. Though we do not require trade balance, the role of initial assets is subtle: our result rules out foreign ownership of domestic assets, but does not constrain domestic ownership of foreign assets. Under imperfect competition, our result effectively rules out all multinational firms. We conclude by discussing the implications for border adjustment taxes. (JEL D41, D43, F13, F14, F23)","PeriodicalId":29954,"journal":{"name":"American Economic Review-Insights","volume":" ","pages":""},"PeriodicalIF":8.5,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1257/AERI.20170006","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45192786","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper builds a model of the two-way interaction between democratic values and institutions to bridge sociological research, focusing on values, with economics research, which studies strategic decisions. Some citizens hold values that make them protest to preserve democracy with the share of such citizens evolving endogenously over time. There is then a natural complementarity between values and institutions creating persistence without assuming any form of commitment. The approach unifies ideas in the literature, explains observed patterns in the data on democratic values and political institutions, and suggests new insights into sources of heterogeneity in values. (JEL D02, D72)
{"title":"Democratic Values and Institutions","authors":"T. Besley, T. Persson","doi":"10.1257/AERI.20180248","DOIUrl":"https://doi.org/10.1257/AERI.20180248","url":null,"abstract":"This paper builds a model of the two-way interaction between democratic values and institutions to bridge sociological research, focusing on values, with economics research, which studies strategic decisions. Some citizens hold values that make them protest to preserve democracy with the share of such citizens evolving endogenously over time. There is then a natural complementarity between values and institutions creating persistence without assuming any form of commitment. The approach unifies ideas in the literature, explains observed patterns in the data on democratic values and political institutions, and suggests new insights into sources of heterogeneity in values. (JEL D02, D72)","PeriodicalId":29954,"journal":{"name":"American Economic Review-Insights","volume":" ","pages":""},"PeriodicalIF":8.5,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1257/AERI.20180248","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42761159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Existing economic models show how new technology can cause large changes in relative wages and inequality. But there are also claims, based largely on verbal expositions, that new technology can harm workers on average or even all workers. This paper shows— under plausible assumptions—that new technology is unlikely to cause wages for all workers to fall and will cause average wages to rise if the prices of investment goods fall relative to consumer goods (a condition supported by the data). We outline how results may change with different assumptions. (JEL D31, G31, J22, J24, J31, O31, O33)
{"title":"Robot Arithmetic: New Technology and Wages","authors":"F. Caselli, A. Manning","doi":"10.1257/AERI.20170036","DOIUrl":"https://doi.org/10.1257/AERI.20170036","url":null,"abstract":"Existing economic models show how new technology can cause large changes in relative wages and inequality. But there are also claims, based largely on verbal expositions, that new technology can harm workers on average or even all workers. This paper shows— under plausible assumptions—that new technology is unlikely to cause wages for all workers to fall and will cause average wages to rise if the prices of investment goods fall relative to consumer goods (a condition supported by the data). We outline how results may change with different assumptions. (JEL D31, G31, J22, J24, J31, O31, O33)","PeriodicalId":29954,"journal":{"name":"American Economic Review-Insights","volume":" ","pages":""},"PeriodicalIF":8.5,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1257/AERI.20170036","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45251415","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyze a market where some consumers only consider buying from a specific seller while other consumers choose the best deal from several sellers. When sellers are able to discriminate against their captive customers, we show that discrimination harms consumers in aggregate relative to the situation with uniform pricing when sellers are approximately symmetric, while the practice tends to benefit consumers in sufficiently asymmetric markets. We also show how the asymmetry of markets may be affected by the information that firms have on consumer captivity. (JEL D11, D43, D83, L13)
{"title":"Discriminating against Captive Customers","authors":"M. Armstrong, J. Vickers","doi":"10.1257/AERI.20180581","DOIUrl":"https://doi.org/10.1257/AERI.20180581","url":null,"abstract":"We analyze a market where some consumers only consider buying from a specific seller while other consumers choose the best deal from several sellers. When sellers are able to discriminate against their captive customers, we show that discrimination harms consumers in aggregate relative to the situation with uniform pricing when sellers are approximately symmetric, while the practice tends to benefit consumers in sufficiently asymmetric markets. We also show how the asymmetry of markets may be affected by the information that firms have on consumer captivity. (JEL D11, D43, D83, L13)","PeriodicalId":29954,"journal":{"name":"American Economic Review-Insights","volume":" ","pages":""},"PeriodicalIF":8.5,"publicationDate":"2019-02-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1257/AERI.20180581","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42574914","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A statistician takes an action on behalf of an agent, based on the agent’s self-reported personal data and a sample involving other people. The action that he takes is an estimated function of the agent’s report. The estimation procedure involves model selection. We ask the following question: Is truth-telling optimal for the agent given the statistician’s procedure? We analyze this question in the context of a simple example that highlights the role of model selection. We suggest that our simple exercise may have implications for the broader issue of human interaction with machine learning algorithms. (JEL C52)
{"title":"The Model Selection Curse","authors":"K. Eliaz, R. Spiegler","doi":"10.1257/aeri.20180485","DOIUrl":"https://doi.org/10.1257/aeri.20180485","url":null,"abstract":"A statistician takes an action on behalf of an agent, based on the agent’s self-reported personal data and a sample involving other people. The action that he takes is an estimated function of the agent’s report. The estimation procedure involves model selection. We ask the following question: Is truth-telling optimal for the agent given the statistician’s procedure? We analyze this question in the context of a simple example that highlights the role of model selection. We suggest that our simple exercise may have implications for the broader issue of human interaction with machine learning algorithms. (JEL C52)","PeriodicalId":29954,"journal":{"name":"American Economic Review-Insights","volume":"1 1","pages":""},"PeriodicalIF":8.5,"publicationDate":"2018-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1257/aeri.20180485","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46482876","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper exploits vast granular data—with over one million county-month observations—to estimate a dynamic panel data model of weather’s local employment effects. The fitted county model is then aggregated and used to generate in-sample and rolling out-of-sample (nowcast) estimates of the weather effect on national monthly employment. These nowcasts, which use only employment and weather data available prior to a given employment report, are significantly predictive not only of the surprise component of employment reports but also of stock and bond market returns on the days of employment reports. (JEL C53, G12, G17, H63, Q54, R23)
{"title":"Clearing the Fog: The Predictive Power of Weather for Employment Reports and Their Asset Price Responses","authors":"Daniel J. Wilson","doi":"10.1257/AERI.20180432","DOIUrl":"https://doi.org/10.1257/AERI.20180432","url":null,"abstract":"This paper exploits vast granular data—with over one million county-month observations—to estimate a dynamic panel data model of weather’s local employment effects. The fitted county model is then aggregated and used to generate in-sample and rolling out-of-sample (nowcast) estimates of the weather effect on national monthly employment. These nowcasts, which use only employment and weather data available prior to a given employment report, are significantly predictive not only of the surprise component of employment reports but also of stock and bond market returns on the days of employment reports. (JEL C53, G12, G17, H63, Q54, R23)","PeriodicalId":29954,"journal":{"name":"American Economic Review-Insights","volume":"1 1","pages":""},"PeriodicalIF":8.5,"publicationDate":"2017-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1257/AERI.20180432","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42698621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We exploit the gender-specific components of large-scale labor demand shocks stemming from rising international manufacturing competition to test how shifts in the relative economic stature of young men versus young women affected marriage, fertility, and children’s living circumstances during 1990–2014. On average, trade shocks differentially reduce employment and earnings of young adult males. Consistent with Becker’s model of household specialization, shocks to males’ relative earnings reduce marriage and fertility. Consistent with prominent sociological accounts, these shocks heighten male idleness and premature mortality, and raise the share of mothers who are unwed and the share of children living in below-poverty, single-headed households. (JEL F16, J12, J13, J16, J23, J31, L60)
{"title":"When Work Disappears: Manufacturing Decline and the Falling Marriage-Market Value of Young Men","authors":"David Autor, David Dorn, Gordon H. Hanson","doi":"10.1257/AERI.20180010","DOIUrl":"https://doi.org/10.1257/AERI.20180010","url":null,"abstract":"We exploit the gender-specific components of large-scale labor demand shocks stemming from rising international manufacturing competition to test how shifts in the relative economic stature of young men versus young women affected marriage, fertility, and children’s living circumstances during 1990–2014. On average, trade shocks differentially reduce employment and earnings of young adult males. Consistent with Becker’s model of household specialization, shocks to males’ relative earnings reduce marriage and fertility. Consistent with prominent sociological accounts, these shocks heighten male idleness and premature mortality, and raise the share of mothers who are unwed and the share of children living in below-poverty, single-headed households. (JEL F16, J12, J13, J16, J23, J31, L60)","PeriodicalId":29954,"journal":{"name":"American Economic Review-Insights","volume":" ","pages":""},"PeriodicalIF":8.5,"publicationDate":"2017-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1257/AERI.20180010","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46203078","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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