Woodford: Assuming People Have Rational Expectations
Not Best for Predicting Responses to ‘Forward Guidance’

At the NBER's 33rd Annual Conference on Macroeconomics, Michael Woodford of Columbia University critiqued the common assumption that people in the economy have fully worked out plans for all future contingencies and that these govern their responses to central bank announcements of long-term policy commitments. He presented work showing that assuming people operate more like the best artificial intelligence programs for playing chess can produce more accurate results.

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A New NBER Book Explores How High-Skilled
Immigrants Affect U.S. Innovation and Productivity

Immigration policy is one of the most contentious public policy issues in the United States today. High-skilled immigrants represent an increasing share of the U.S. workforce, particularly in science and engineering fields. These immigrants affect economic growth, patterns of trade, education choices, and the earnings of workers with different types of skills. High–Skilled Immigration to the United States and Its Economic Consequences, a new NBER book from the University of Chicago Press, goes beyond the traditional question of how the inflow of foreign workers affects native employment and earnings to explore effects on innovation and productivity, wage inequality across skill groups, the behavior of multinational firms, firm-level dynamics of entry and exit, and the nature of comparative advantage across countries.

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New NBER Research

18 June 2018

Transportation Speed Facilitates High Skilled Teamwork

China’s high speed rail (HSR) network reduces the cost of face-to-face interactions between skilled workers who work in different cities. Xiaofang Dong, Siqi Zheng, and Matthew E. Kahn find that skilled workers’ productivity rises when secondary cities are connected by bullet train to major cities, where the best universities are located.

15 June 2018

The Business Cycle and the Wages of Federal Workers

Congshan Zhang and John M. de Figueiredo find that workers who join the federal civil service during recessions earn more, over the long term, than those who join during better economic times. This finding is contrary to results of studies of private sector workers; the researchers suggest it may be due to cyclical changes in the occupational mix of new hires or to the match of workers to their jobs.

14 June 2018

How Redeployable are the Patents of Failed Startups?

Most patents originating from failed startups are sold quickly and retain value beyond the original venture and team Carlos J. Serrano and Rosemarie Ziedonis find. The patents tend to be purchased by other operating companies in the same sector and sometimes patents and people move jointly from the original venture to a new organization.
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The NBER Bulletin on Aging and Health

Increased Sunlight Exposure Positively Associated
with Reduced Incidence of Influenza Cases

Influenza is among the top ten causes of death in the United States, and even less-severe cases of the flu can affect worker productivity and consume substantial healthcare resources. Research summarized in the current edition of the NBER's Bulletin on Aging and Health finds a significant positive relationship across states between average sunlight exposure and reduced levels of the flu.

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The NBER Digest

Dodd-Frank Legislation Passed after the 2008 Crisis
Associated with Decline in Lending to Small Business

Enactment of the Dodd-Frank Act in 2010 was followed by a 9 percent decline in large banks' issuance of relatively small commercial and industrial loans and an even greater percentage decline at smaller banks, a study summarized in the latest edition of The NBER Digest shows. The act was recently revised to ease regulation of small and medium-sized banks. Also featured in the June Digest is research exploring the use of online prices to calculate purchasing power parity, analyzing the income consequences of women retiring early, measuring educational and income benefits of conditional cash transfers, and gauging the effects of job-search assistance, and examining the impact of cyberattacks.

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The NBER Reporter

Reciprocity and Affinity in Charitable Giving:
Some Findings Based on Studies in Higher Education

Economists have long recognized that altruism is an important part of human behavior. That said, some charitable behavior is doubtless driven in part by self-interest: Donors might expect something in return, such as prestige, gifts, or the ability to signal their virtue to others. A dataset from an anonymized major research university has given researchers an opportunity to gauge the degree to which such expectations play a roll. Their findings are in the 2018:1 issue of The NBER Reporter. Also in this quarterly issue of The Reporter, economists write about their studies of the advantages of using consumption rather than income levels to measure inequality, new approaches to helping the world’s poorest people out of poverty, the causes of segregation in U.S. cities, and the future potential of cryptocurrencies and blockchains.

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