ABSTRACT:The paper provides an overview of cryptocurrencies and decentralized finance (DeFi). The discussion lays out potential benefits and challenges of the new system and presents a comparison to the traditional system of financial intermediation. Our analysis highlights that while the DeFi architecture might have the potential to reduce transaction costs, similar to the traditional financial system, there are several layers where rents can accumulate due to endogenous constraints to competition. We show that the permissionless and pseudonymous design of DeFi generates challenges for enforcing tax compliance and anti–money laundering laws and preventing financial malfeasance. We highlight ways to regulate the DeFi system which would preserve a majority of benefits of the underlying blockchain architecture but support accountability and regulatory compliance.
{"title":"Cryptocurrencies and Decentralized Finance (DeFi)","authors":"I. Makarov, A. Schoar","doi":"10.2139/ssrn.4098328","DOIUrl":"https://doi.org/10.2139/ssrn.4098328","url":null,"abstract":"ABSTRACT:The paper provides an overview of cryptocurrencies and decentralized finance (DeFi). The discussion lays out potential benefits and challenges of the new system and presents a comparison to the traditional system of financial intermediation. Our analysis highlights that while the DeFi architecture might have the potential to reduce transaction costs, similar to the traditional financial system, there are several layers where rents can accumulate due to endogenous constraints to competition. We show that the permissionless and pseudonymous design of DeFi generates challenges for enforcing tax compliance and anti–money laundering laws and preventing financial malfeasance. We highlight ways to regulate the DeFi system which would preserve a majority of benefits of the underlying blockchain architecture but support accountability and regulatory compliance.","PeriodicalId":51405,"journal":{"name":"Brookings Papers on Economic Activity","volume":"35 1","pages":"141 - 215"},"PeriodicalIF":5.9,"publicationDate":"2022-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91350020","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Panel on Fiscal Policy and Budget Deficits Following The Pandemic","authors":"Carmen M. Reinhart","doi":"10.1353/eca.2022.0015","DOIUrl":"https://doi.org/10.1353/eca.2022.0015","url":null,"abstract":"","PeriodicalId":51405,"journal":{"name":"Brookings Papers on Economic Activity","volume":"279 1","pages":""},"PeriodicalIF":5.9,"publicationDate":"2022-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74976624","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT:This is an update of a paper that we published with Karl E. Case in Brookings Papers on Economic Activity in 2012. The paper analyzes data from our annual questionnaire survey of US home buyers to understand their expectations for future home price changes. We again see a period of rapid price increase as we did in our surveys a decade ago. We find that home buyers were generally well informed, and their short-run expectations were conservative, typically underreacting to the year-to-year changes in actual home prices. Housing bubbles can be seen in their long-term (annualized ten-year) home price expectations. The long boom that preceded the 2007–2009 crisis was associated with changing public understanding of speculative bubbles. During the early years of this decade-long rebound, both short- and long-term expectations were out of line with actual changes in prices. Since 2013, long-term expectations have converged with short-term expectations and actual price changes in most locations, and all three series have moved in synch. With the onset of COVID-19, in 2021 actual and anticipated appreciation diverged once again. This time, however, short-term expectations surged above long-term expectations but remained far below actual appreciation rates. Buyers presumed a coming slowdown in the market that has yet to materialize.
{"title":"What Have They Been Thinking? Home Buyer Behavior in Hot and Cold Markets: A Ten-Year Retrospect","authors":"R. Shiller, Ann-Marie K. Thompson","doi":"10.1353/eca.2022.0012","DOIUrl":"https://doi.org/10.1353/eca.2022.0012","url":null,"abstract":"ABSTRACT:This is an update of a paper that we published with Karl E. Case in Brookings Papers on Economic Activity in 2012. The paper analyzes data from our annual questionnaire survey of US home buyers to understand their expectations for future home price changes. We again see a period of rapid price increase as we did in our surveys a decade ago. We find that home buyers were generally well informed, and their short-run expectations were conservative, typically underreacting to the year-to-year changes in actual home prices. Housing bubbles can be seen in their long-term (annualized ten-year) home price expectations. The long boom that preceded the 2007–2009 crisis was associated with changing public understanding of speculative bubbles. During the early years of this decade-long rebound, both short- and long-term expectations were out of line with actual changes in prices. Since 2013, long-term expectations have converged with short-term expectations and actual price changes in most locations, and all three series have moved in synch. With the onset of COVID-19, in 2021 actual and anticipated appreciation diverged once again. This time, however, short-term expectations surged above long-term expectations but remained far below actual appreciation rates. Buyers presumed a coming slowdown in the market that has yet to materialize.","PeriodicalId":51405,"journal":{"name":"Brookings Papers on Economic Activity","volume":"5 1","pages":"307 - 366"},"PeriodicalIF":5.9,"publicationDate":"2022-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79308311","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Comments and Discussion","authors":"William A. Darity, Benjamin Moll","doi":"10.1353/eca.2022.0021","DOIUrl":"https://doi.org/10.1353/eca.2022.0021","url":null,"abstract":"","PeriodicalId":51405,"journal":{"name":"Brookings Papers on Economic Activity","volume":"27 1","pages":"48 - 63"},"PeriodicalIF":5.9,"publicationDate":"2022-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83238209","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT:I use mapping and age trajectories of advanced cognitive skills to better understand why these skills are more prevalent in some local areas than in others. The study begins by explaining what advanced cognitive skills are. It offers a nonspecialist’s review of recent brain science that indicates that adolescence is the key period for the development of advanced cognitive skills. The paper considers three main explanations for why the prevalence of advanced cognitive skills varies substantially across US counties. Is it early childhood factors which could generate endogenous responses that are important later when advanced cognitive skills are developing? Is it factors whose influence is greatest during adolescence—the period when brain science argues that experience would most directly affect advanced cognitive skills? If so, adolescence is indeed the age of opportunity but also risk. Is the variation among counties explained by migration of individuals toward areas where other people have advanced cognitive skills similar to their own? Evidence based on cognitive skill trajectories, maps at different ages, and longitudinal regressions suggests that all three of these explanations play a role in generating areas where advanced cognitive skills are prevalent and areas where they are not—advanced cognitive skill deserts.
{"title":"Advanced Cognitive Skill Deserts in the United States: Their Likely Causes and Implications","authors":"Caroline M. Hoxby","doi":"10.1353/eca.2021.0006","DOIUrl":"https://doi.org/10.1353/eca.2021.0006","url":null,"abstract":"ABSTRACT:I use mapping and age trajectories of advanced cognitive skills to better understand why these skills are more prevalent in some local areas than in others. The study begins by explaining what advanced cognitive skills are. It offers a nonspecialist’s review of recent brain science that indicates that adolescence is the key period for the development of advanced cognitive skills. The paper considers three main explanations for why the prevalence of advanced cognitive skills varies substantially across US counties. Is it early childhood factors which could generate endogenous responses that are important later when advanced cognitive skills are developing? Is it factors whose influence is greatest during adolescence—the period when brain science argues that experience would most directly affect advanced cognitive skills? If so, adolescence is indeed the age of opportunity but also risk. Is the variation among counties explained by migration of individuals toward areas where other people have advanced cognitive skills similar to their own? Evidence based on cognitive skill trajectories, maps at different ages, and longitudinal regressions suggests that all three of these explanations play a role in generating areas where advanced cognitive skills are prevalent and areas where they are not—advanced cognitive skill deserts.","PeriodicalId":51405,"journal":{"name":"Brookings Papers on Economic Activity","volume":"69 1","pages":"317 - 351"},"PeriodicalIF":5.9,"publicationDate":"2022-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91037499","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"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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