Raghuram Rajan, in 10th annual Feldstein Lecture,
Analyzes Role of Liquidity in Recent Financial Crisis

Raghuram Rajan of the University of Chicago and NBER recently delivered the Martin Feldstein Lecture at the NBER Summer Institute. A former governor of the Reserve Bank of India and chief economist of the International Monetary Fund, Rajan analyzed the 2007-09 financial crisis through a consideration of reactions to either excess or insufficient liquidity in the markets. "When you see a combination of high credit growth and rising asset prices, you should be screaming ‘Fire!’" he said, but herd behavior in the credit market keeps the good times going, while expectations of illiquidity "can lead to frozen markets and credit" as herd behavior in the opposite direction exaggerates downturns.

The NBER Reporter

Work by Asset Pricing Program Researchers
Probes Challenges Posed by 2007-09 Financial Crisis

In the aftermath of the last financial crisis, researchers in the NBER's Asset Pricing Program have examined issues including the applicability of the law of one price, extraordinary house price volatility, and changing patterns of asset demands raised by the crisis. A program report leads the new edition of the quarterly NBER Reporter. Also in this issue of The Reporter: A summary of over a decade's work on implicit taxes built in to retirement programs; an analysis of the rapidly shrinking number of firms listed on U.S. stock exchanges; a report on the effects of gender imbalance on saving behaviors within families and in the broader economy; and an examination of firm behaviors in reaction to changes in the competitive environment.

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New NBER Research

20 July 2018

Direct and Indirect Effects of Local TFP Growth

When a city experiences productivity gains in manufacturing, employment and earnings increase. Richard Hornbeck and Enrico Moretti find that for renters increased earnings are largely offset by increased cost of living, while for homeowners, the benefits are substantial. Local productivity growth is associated with a reduction in local inequality.

19 July 2018

Take-Up, Drop-Out, and Spending in ACA Marketplaces

Consumers’ health care consumption spiked following their enrollment in the California ACA marketplace, and, after the spike, there was widespread attrition. More than half of all new enrollees dropped coverage before the end of the plan year, Rebecca Diamond, Michael J. Dickstein, Timothy McQuade, and Petra Persson find.

18 July 2018

International Currencies and Capital Allocation

While the vast majority of firms around the world issue bonds only in local currency and do not directly access foreign capital, the global willingness to hold U.S. dollars means that even smaller U.S. firms have little difficulty borrowing from abroad, according to a study by Matteo Maggiori, Brent Neiman, and Jesse Schreger.
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The NBER Digest

Gains from High-Speed Rail Expansion in Germany
Have Accrued Mostly to the Country’s Smaller Cities

The second wave of high-speed rail expansion in Germany connected many smaller cities to a network which at its inception connected only the largest metropolises. Research featured in the current edition of The NBER Digest finds that when the smaller cities were connected, reduction in travel times increased the number of commuters working in smaller cities while retaining homes in larger ones. Also in the July Digest: An analysis of misallocation in the European Union, an examination of corporate foundation giving in the districts of powerful congress people, and an exploration of the impact of postdoctoral fellowships on biomedical researchers, a look at the success rates of middle-aged entrepreneurs, and a study of the relationship between population aging and automation.

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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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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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