Michael C. Best
Department of Economics
420 West 118th Street
New York, NY 10027
NBER Program Affiliations:
NBER Affiliation: Faculty Research Fellow
Institutional Affiliation: Columbia University
Information about this author at RePEc
NBER Working Papers and Publications
|August 2018||Estimating the Elasticity of Intertemporal Substitution Using Mortgage Notches|
with James Cloyne, Ethan Ilzetzki, Henrik Kleven: w24948
Using a novel source of quasi-experimental variation in interest rates, we develop a new approach to estimating the Elasticity of Intertemporal Substitution (EIS). In the UK, the mortgage interest rate features discrete jumps – notches – at thresholds for the loan-to-value (LTV) ratio. These notches generate large bunching below the critical LTV thresholds and missing mass above them. We develop a dynamic model that links these empirical moments to the underlying structural EIS. The average EIS is small, around 0.1, and quite homogeneous in the population. This finding is robust to structural assumptions and can allow for uncertainty, a wide range of risk preferences, portfolio reallocation, liquidity constraints, present bias, and optimization frictions. Our findings have implications for...
|April 2017||Individuals and Organizations as Sources of State Effectiveness|
with Jonas Hjort, David Szakonyi: w23350
How important are bureaucrats for the productivity of the state? And to what extent do the tradeoffs between different policies depend on the implementing bureaucrats’ effectiveness? Using data on 16million public procurement purchases in Russia during 2011–2016, we show that over 40 percent of the variation in quality-adjusted prices paid—our measure of performance—is due to the individual bureaucrats and organizations that manage procurement processes. Such differences in effectiveness matter for policy design. To illustrate, we show that a common procurement policy— bid preferences for domestic suppliers—dramatically improves performance, but only when implemented by ineffective bureaucrats.