IS THERE A FISCAL FREE LUNCH IN A LIQUIDITY TRAP?

In this paper, we use a dynamic stochastic general equilibrium model to examine the effects of an expansion in government spending in a liquidity trap. If the liquidity trap is very prolonged, the spending multiplier can be much larger than in normal circumstances, and the budgetary costs minimal. However, given this fiscal free lunch, it is unclear why policymakers would want to limit the size of fiscal expansion. Our paper addresses this question in a model environment in which the duration of the liquidity trap is determined endogenously, and depends on the size of the fiscal stimulus. We show that even if the multiplier is high for small increases in government spending, it may decrease substantially at higher spending levels; thus, it is crucial to distinguish between the marginal and average responses of output and government debt.     

WHAT GOOD IS WEALTH WITHOUT HEALTH? THE EFFECT OF HEALTH ON THE MARGINAL UTILITY OF CONSUMPTION

We estimate how the marginal utility of consumption varies with health. To do so, we develop a simple model in which the impact of health on the marginal utility of consumption can be estimated from data on permanent income, health, and utility proxies. We estimate the model using the Health and Retirement Study's panel data on the elderly and near‐elderly, and proxy for utility with measures of subjective well‐being. Across a wide range of alternative specifications and assumptions, we find that the marginal utility of consumption declines as health deteriorates, and we are able to clearly reject the null of no state dependence. Our point estimates indicate that a one‐standard‐deviation increase in the number of chronic diseases is associated with a 10%–25% decline in the marginal utility of consumption relative to this marginal utility when the individual has no chronic diseases. We present some simple, illustrative calibration results that suggest that state dependence of the magnitude we estimate can have a substantial effect on important economic problems such as the optimal level of health insurance benefits and the optimal level of life‐cycle savings.     

A SIMULATION GAME FOR TEACHING SERVICE‐ORIENTED SUPPLY CHAIN MANAGEMENT: DOES INFORMATION SHARING HELP MANAGERS WITH SERVICE CAPACITY DECISIONS?*

For decades, the Beer Game has taught complex principles of supply chain management in a finished good inventory supply chain. However, services typically cannot hold inventory and can only manage backlogs through capacity adjustments. We propose a simulation game designed to teach service‐oriented supply chain management principles and to test whether managers use them effectively. For example, using a sample of typical student results, we determine that student managers can effectively use end‐user demand information to reduce backlog and capacity adjustment costs. The game can also demonstrate the impact of demand variability and reduced capacity adjustment time and lead times.     

EOQ FORMULA: IS IT VALID UNDER INFLATIONARY CONDITIONS?

The classical analysis of the economic order quantity (EOQ) problem ignores the effect of inflation. When a firm's cost factors are expected to rise at an annual rate of 10 percent or more, what adjustments in order quantities should the firm make to control its lot-size inventory (or cycle stock)? Using a model that includes both inflationary trends and time discounting, it is concluded that inflation brings no incentive either to increase or to decrease order quantities. In addition, order quantities can be computed using the classical EOQ formula under inflationary conditions, provided that the cost of capital invested in inventory is interpreted as an inflation-free cost. This interpretation implies that changes in the inflation rate should not affect the cost of capital that is utilized in the EOQ formula for determining order quantities.     

BIASES IN MACROECONOMIC FORECASTS: IRRATIONALITY OR ASYMMETRIC LOSS?

Empirical studies using survey data on expectations have frequently observed that forecasts are biased and have concluded that agents are not rational. We establish that existing rationality tests are not robust to even small deviations from symmetric loss and hence have little ability to tell whether the forecaster is irrational or the loss function is asymmetric. We quantify the trade‐off between forecast inefficiency and asymmetric loss leading to identical outcomes of standard rationality tests and explore new and more general methods for testing forecast rationality jointly with flexible families of loss functions that embed squared loss as a special case. Empirical applications to survey data on forecasts of real output growth and inflation suggest that rejections of rationality may largely have been driven by the assumption of squared loss. Moreover, our results suggest that agents are averse to “bad” outcomes such as lower‐than‐expected real output growth and higher‐than‐expected inflation and that they incorporate such loss aversion into their forecasts. (JEL: C22, C53, E37)     

CROWDING OUT IN BLOOD DONATION: WAS TITMUSS RIGHT?

In his seminal 1970 book, The Gift Relationship, Richard Titmuss argued that monetary compensation for donating blood might crowd out the supply of blood donors. To test this claim we carried out a field experiment with three different treatments. In the first treatment subjects were given the opportunity to become blood donors without any compensation. In the second treatment subjects received a payment of SEK 50 (about $7) for becoming blood donors, and in the third treatment subjects could choose between a SEK 50 payment and donating SEK 50 to charity. The results differ markedly between men and women. For men the supply of blood donors is not significantly different among the three experimental groups. For women there is a significant crowding‐out effect. The supply of blood donors decreases by almost half when a monetary payment is introduced. There is also a significant effect of allowing individuals to donate the payment to charity, and this effect fully counteracts the crowding‐out effect. (JEL: C93, D64, I18, Z13)     

IS THE ELASTICITY OF INTERTEMPORAL SUBSTITUTION CONSTANT?

In all common models of inter‐temporal allocation, the assumption of a constant elasticity of intertemporal substitution (EIS) imposes surprising limitations on within‐period budget allocations. Consequently, the constant EIS assumption can be tested with demand data. In fact, the EIS is pinned down completely by the shape of Engel curves: if the EIS is constant then the EIS can be estimated without variation in the interest rate. That a price elasticity can be estimated without variation in the relevant price illustrates just how strong the constant EIS assumption is. The constant EIS assumption is rejected by demand data.     

IS THE ENDOWMENT EFFECT AN EXPECTATIONS EFFECT?

A hallmark result within behavioral economics is that individuals' choices are affected by current endowments. A recent theory due to Kőszegi and Rabin ( 2006 , Quarterly Journal of Economics, 121, 1133–1165) explains such endowment effect with a model of expectations‐based reference‐dependent preferences. Departing from past work, we conduct complementary experiments to disentangle expectations—verified probabilistic beliefs held by subjects—from other features of endowment—such as “assignment” to a good—hence allowing us to compare the effect of expectations with that of other variations. While mere assignment can affect choices, we do not find a large role in the effect for Kőszegi–Rabin expectations.     

LIVING ARRANGEMENTS IN WESTERN EUROPE: DOES CULTURAL ORIGIN MATTER?

Conventional economic analyses have not been successful in explaining differences in living arrangements and particularly the dramatic increase in the fraction of young adults living with their parents in Mediterranean Europe. This paper presents a cultural interpretation. I argue that the sexual revolution of the 1970s—by liberalizing parental attitudes—had a differential impact on living arrangements in Northern and Southern Europe on account of the closer parent–child ties in Southern Europe. Such an interpretation can easily explain both the shift in living arrangements over time and also observed North–South differentials. It receives support from data on the living arrangements of second‐generation immigrants in the United States, both in 1970 and 2000. This duplication of the European pattern in a neutral environment, with the same unemployment benefits, the same welfare code, and the same macroeconomic conditions suggests a major role for culture in determining living arrangements. (JEL: D1, J1, Z13)     

HUMAN CAPITAL IN GROWTH REGRESSIONS: HOW MUCH DIFFERENCE DOES DATA QUALITY MAKE?

We construct estimates of educational attainment for a sample of 21 OECD countries. Our series incorporate previously unexploited information and remove sharp breaks in the data that can only reflect changes in classification criteria. We then construct indicators of the information content of our estimates and a number of previously available data sets and examine their performance in several growth specifications. We find a clear positive correlation between data quality and the size and significance of human capital coefficients in growth regressions. Using an extension of the classical errors in variables model to correct for measurement error bias, we construct a set of meta‐estimates of the coefficient of years of schooling in an aggregate Cobb‐Douglas production function. Our results suggest that the value of this parameter is likely to be above 0.60. (JEL: O40, I20, O30, C19)     

ERRATA CORRIGE: “ARE MUSLIM IMMIGRANTS DIFFERENT IN TERMS OF CULTURAL INTEGRATION?”

We are thankful to Michael Lundholm and Mahmood Arai for pointing us towards a coding error which invalidates the regressions in our paper. Correcting the code leads to a decrease in sample sizes, though much smaller than Arai et al. (2011) claim based on their “replication”. An appropriate redefinition of the variables and of the model specification allows us to reproduce the substance of the empirical analysis in our original published paper. Although the results are now less clear‐cut, our analysis remains essentially unchanged.     

地球:变暧?还是变冷?

新年前后,世界多个地区出现了不同程度的"寒流".亚太、欧洲纷纷出现灾难性的严寒天气,"最低气温"、"雪"、"冻"之类的字眼频频现于报端.严寒偷袭,让人措手不及;而"厄尔尼诺"、"全球变暖"、"温室效应"这样的说法似乎昨天还在萦绕耳际.人们不禁要问:"地球到底怎么了?"     

家具市场:映红半边天?

<正> 随着城乡人民群众生活水平的日益提高。家具也日益受到国人的青睐。不过,透视时下的家具市场,还是让人们从这一繁荣现象的背后,看出了一丝无奈,不由得感慨万分:家具市场,真能映红家居半边天吗? 日益火爆的家具市场 近几年家具市场的“火爆”是人们公认的事产。有数据表明:1985年,全国主要隶属轻工系统的家具企业共有3600家,到1993年,全国家具厂已发展到22000多家,而且有增无减。其中,乡镇企业利用队伍年轻、政策优惠、经营手法灵活等有利条件,掀起了中国家具市场的第     

住房贷款:谁担保?拿什么抵押?

我国目前的住房抵押贷款分为三种担保层次。你是哪一种?随着福利分房的取消,不仅职工购买新的商品房需要贷款,而且一部分职工购买原有住房也需要贷款,住房贷款需求会     

中国引资政策:向左走?向右走?

中国在加入世贸组织后,引进外资的数量在几年中保持稳定增长的势头。为了保持吸引外资持续增长的良好势头,中国的引资政策应该作出怎样的调整?     

中国制造业:假衰退?真繁荣?

近期,国内关于中国制造业是否会衰退的担心在增加.对于中国这样一个高度依赖投资和外需拉动经济的国家,制造业出现整体衰退的影响将会很大.因此,有必要进一步进行剖析.从相关的讨论看,这些担心主要来自如下一些迹象.     

约翰·科特:变革因何失效?

真正的紧迫感是应对危机的关键全球经济剧变,很多企业面临重重危机,并纷纷出台变革措施。但事实是,变革失败的几率远远超过成功的几率。"因为真正的紧迫感是领导变革和应对危机的关键,却没有人发现它。"约翰·科特接受采访时     

2010:中美摩擦年?

美国在可能引起中美外交纠纷的问题上把中国惹了个遍?2010年才过去2个月,中美争端就成为中国外交部发言人在新闻发布会上提出声明和被追问最多的话题。     

ON FRAGILE GROUNDS: A REPLICATION OF “ARE MUSLIM IMMIGRANTS DIFFERENT IN TERMS OF CULTURAL INTEGRATION?”

This study is a replication of “Are Muslim Immigrants Different in terms of Cultural Integration?” by Alberto Bisin, Eleonora Patacchini, Thierry Verdier and Yves Zenou, published in the Journal of the European Economic Association, 6, 445–456, 2008. Bisin et al. (2008) report that they have 5,963 observations in their study. Using their empirical setup, we can only identify 1,901 relevant observations in the original data. After removing missing values we are left with 818 observations. We cannot replicate any of their results and our estimations yield no support for their claims.