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.     

DO HOUSE PRICES DRIVE CONSUMPTION GROWTH? THE COINCIDENT CYCLES OF HOUSE PRICES AND CONSUMPTION IN THE UK

This paper uses a realistic structural lifecycle model of consumption and housing decisions to understand how data might distinguish different mechanisms that explain the correlation between house prices and consumption. The model includes price and earnings shocks estimated from data (the latter including aggregate and idiosyncratic components), and incorporates realistic features of the UK mortgage market. We simulate the model using more than 30 years of realized shocks and under counterfactual scenarios. Our results confirm the intuition of earlier studies: house price shocks should have a larger effect on the consumption of older households and earnings shocks on young households.     

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.     

HOW DESTRUCTIVE IS CREATIVE DESTRUCTION? EFFECTS OF JOB LOSS ON JOB MOBILITY,WITHDRAWAL AND INCOME

We analyze short and long‐term effects of worker displacement. Our sample consists of male workers displaced from Norwegian manufacturing plants. We find that displacement increases the probability of leaving the labor force by 31%. The drop‐out rate from the labor force is particularly high in the first years following displacement. The average earnings effects for those who remain in the labor force are moderate, a 3% loss relative to non‐displaced workers after seven years. Splitting displaced workers on within‐ and between‐firm movers, we find that the estimated earnings loss is entirely driven by between‐firm movers who experience a 3.6% loss. Transfers to other plants within multi‐plant firms upon displacement are quite common. Our results support the view that human capital is partly firm specific and partly industry specific. We find no evidence suggesting that human capital is plant specific.     

WHAT MEASURE OF INFLATION SHOULD A CENTRAL BANK TARGET?

This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes this problem and examines its microeconomic foundations. It then shows how the weight of a sector in the stability price index depends on the sector's characteristics, including size, cyclical sensitivity, sluggishness of price adjustment, and magnitude of sectoral shocks. When a numerical illustration of the problem is calibrated to U.S. data, one tentative conclusion is that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives substantial weight to the level of nominal wages. (JEL: E42, E52, E58)     

LETTING DOWN THE TEAM? SOCIAL EFFECTS OF TEAM INCENTIVES

This paper estimates social effects of incentivizing people in teams. In three field experiments featuring exogenous team formation and opportunities for repeated social interactions, we find large team effects that operate through social channels. In particular, assignment to a team treatment increases productivity by 9%–17% relative to an individual incentive treatment, even though the individual incentive yields a higher private return. Further, we find that in a choice treatment individuals overwhelmingly prefer the individual incentive to the team incentive, despite the latter being more effective. These results are most consistent with the team effects operating through guilt or social pressure as opposed to pure altruism.     

COORDINATION FAILURES AND THE LENDER OF LAST RESORT: WAS BAGEHOT RIGHT AFTER ALL?

The classical doctrine of the Lender of Last Resort (LOLR), elaborated by Bagehot (1873), asserts that the central bank should lend to “illiquid but solvent” banks under certain conditions. Several authors have argued that this view is now obsolete: in modern interbank markets, a solvent bank cannot be illiquid. This paper provides a possible theoretical foundation for rescuing Bagehot's view. Our theory does not rely on the multiplicity of equilibria that arises in classical models of bank runs. We built a model of banks' liquidity crises that possesses a unique Bayesian equilibrium. In this equilibrium, there is a positive probability that a solvent bank cannot find liquidity assistance in the market. We derive policy implications about banking regulation (solvency and liquidity ratios) and interventions of the Lender of Last Resort. Furthermore, we find that public (bailout) and private (bail‐in) involvement are complementary in implementing the incentive efficient solution and that Bagehot's Lender of Last Resort facility must work together with institutions providing prompt corrective action and orderly failure resolution. Finally, we derive similar implications for an International Lender of Last Resort (ILOLR). (JEL: G21, G28)     

WHERE ARE THE ECONOMISTS WHO PUBLISH? PUBLICATION CONCENTRATION AND RANKINGS IN EUROPE BASED ON CUMULATIVE PUBLICATIONS

We measure the past production of research articles by current members of European economics institutions. All EconLit journals are used, weighted to reflect differences in quality. Both a long (1971–2000) and a short (1996–2000) time period are considered. We also provide production indices that take into account the authors' career length. The total output of each research center is measured as well as its production per member. The focus is on 600 centers from eighteen European countries (EU 14, Israel, Norway, Switzerland, and Turkey). European centers are compared to the top sixty U.S. economics departments. Statistics regarding the concentration of article production across researchers, institutions, and countries are provided, as well as on publication habits. (JEL: A14, L11, R32)     

LEAN AND GREEN? AN EMPIRICAL EXAMINATION OF THE RELATIONSHIP BETWEEN LEAN PRODUCTION AND ENVIRONMENTAL PERFORMANCE

Lean production may have a significant public good spillover—improved environmental performance. However, empirical evidence of the link between lean production practices and environmental performance has not resolved the nature of the relationship. To explore this issue, we conduct an empirical analysis of the environmental performance of 17,499 U.S. manufacturing establishments during the time period 1991–1996. We find that those establishments that adopt the quality management standard ISO 9000 are more likely to adopt the environmental management standard ISO 14000. We also find strong evidence that lean production, as measured by ISO 9000 adoption and low chemical inventories, is complementary to waste reduction and pollution reduction.     

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.