We support dynamic ideas through wide-ranging research that embraces both pure theory and applied work where advances in economics can help solve the great challenges of the 21st century. The Institute’s research is interdisciplinary, incorporating concepts from fields including history, political science, psychology, the physical sciences and the humanities.
Over the last four decades, Americans have consistently told pollsters that they favor higher taxes on business and the wealthy, even as tax policy has moved sharply in the other direction.
This paper analyzes the link between Kamakura Risk Information Services (KRIS) data on megabank default probabilities and credit spreads.
Economists’ infamous failure at predicting the recent financial crisis has brought new impetus to studies on diversity in the economics profession. Such studies have underlined how diversity plays a prominent role in enriching economic analyses.
The Theory of the Firm, Financial Flows, and Economic Performance
It is commonly overlooked that the concept of market efficiency embowers a time-dimension. Illustrating with an example from the class of persistent random walks, we show that a price process can be a martingale on one time-scale but inefficient on another.
How & Why Government, Universities, & Industry Create Domestic Labor Shortages of Scientists & High-Tech Workers
Long term labor shortages do not happen naturally in market economies. That is not to say that they don’t exist. They are created when employers or government agencies tamper with the natural functioning of the wage mechanism.
The adoption and diffusion of inputs in the production network is at the heart of technological progress. What determines which inputs are initially considered and eventually adopted by innovators? We examine the evolution of input linkages from a network perspective, starting from a stylized model of network formation.
This chapter surveys experimental research on networks in economics.
An investigation into Multivariate Variance Ratio Statistics and their application to Stock Market Predictability
We propose several multivariate variance ratio statistics. We derive the asymptotic distribution of the statistics and scalar functions thereof under the null hypothesis that returns are unpredictable after a constant mean adjustment (i.e., under the weak form Efficient Market Hypothesis). We do not impose the no leverage assumption of Lo and MacKinlay (1988) but our asymptotic standard errors are relatively simple and in particular do not require the selection of a bandwidth parameter. We extend the framework to allow for a time varying risk premium through common systematic factors.
Exploiting three earthquakes in Italy as quasi-experiments, we analyse the response of homeowners’ consumption to transfers targeted to finance housing repair and reconstruction. To the extent that funds are made available up-front, these transfers are akin to loans, mainly affecting the liquidity of households’ wealth
When the adoption of a new labor‐saving technology increases labor productivity, it is an open question whether the economy adjusts in the medium‐term by decreasing employment or increasing output. This paper studies the effects of cheaper electricity on the labor market during the Great Depression.
This paper presents an experiment investigating the effect of social identity on hiring decisions. The question is whether people discriminate between own and other group candidate
Do large firm dynamics drive the business cycle? We answer this question by developing a quantitative theory of aggregate fluctuations caused by firm-level disturbances alone. We show that a standard heterogeneous firm dynamics setup already contains in it a theory of the business cycle, without appealing to aggregate shocks.
People adopt diverse measures to protect from contagion. I propose a taxonomy of protection technologies, and present a model to study the implications of the technology on the prevalence of infections and on welfare at different levels of exposure.
There is a renewed interest in the size of labour supply elasticities and the discrepancy between micro and macro estimates. Recent contributions have stressed the distinction between changes in labour supply at the extensive and the intensive margin. In this paper, we stress the importance of individual heterogeneity and aggregation problems.