Abstract
We estimate the distribution of well-being among the older U.S. population using an expected utility framework that incorporates differences in consumption, leisure, health, and mortality. We find large disparities in welfare that have increased over time. Incorporating the cost of living with poor health into elderly welfare substantially increases the overall inequality. Disparity measures based on cross-sectional income or consumption underestimate the growth in aggregate welfare inequality. Moreover, health is a better indicator of an individual's relative welfare position than income or consumption. Heterogeneous Innovation over the Business Cycle
Abstract
Schumpeter (1939) claims that recessions are periods of “creative destruction,” concentrating innovation that is useful for the long-term growth of the economy. However previous research finds that standard measures of firms’ innovation, such as R&D expenditures or raw patent counts, concentrate in booms. We argue that these measures do not capture shifts in firms’ innovative search strategies. We contemplate firms’ choice between exploration versus exploitation over the business cycle and find evidence with more nuanced measures of patent characteristics that firms shift toward exploration during contractions and exploitation during expansions, with a stronger effect for firms in more cyclical industries. Asymmetric Demand Response When Prices Increase and Decrease: The Case of Child Health Care
Abstract
This study tests whether demand responds symmetrically to price increases and decreases—a seemingly obvious proposition under conventional demand theory that has not been rigorously tested. Exploiting the rapid expansion in Japanese municipal subsidies for child health care in a difference-in-differences framework, we find evidence against conventional demand theory: when coinsurance, our price measure, increases from 0% to 30%, the demand response is more than twice that to a price decrease from 30% to 0%. This result indicates that while economists and policymakers pay little attention, price change direction matters and should be incorporated into welfare analysis. Time-Varying Uncertainty of the Federal Reserve’s Output Gap Estimate
Abstract
A factor stochastic volatility model estimates the common component to output gap estimates produced by the staff of the Federal Reserve, its time-varying volatility, and time-varying, horizon-specific forecast uncertainty. The output gap estimates are uncertain even well after the fact. Nevertheless, the common component is clearly procyclical, and positive innovations to the common component produce movements in macroeconomic variables consistent with an increase in aggregate demand. Heightened macroeconomic uncertainty, as measured by the common component's volatility, leads to persistently negative economic responses. Commuting, Labor, and Housing Market Effects of Mass Transportation: Welfare and Identification
Abstract
I study Los Angeles Metro Rail's effects using panel data on bilateral commuting flows, a quantitative spatial model, and historically motivated quasi-experimental research designs. The model separates transit's commuting effects from local productivity or amenity effects, and spatial shift-share instruments identify inelastic labor and housing supply. Metro Rail connections increase commuting by 16% but do not have large effects on local productivity or amenities. Metro Rail generates $94 million in annual benefits by 2000 or 12–25% of annualized costs. Accounting for reduced congestion and slow transit adoption adds, at most, another $200 million in annual benefits. Food Price Dynamics During the Pandemic
The Indian Economic Journal, Ahead of Print.
Coronavirus disease 2019 (COVID-19) posed a serious challenge to food production and distribution worldwide. There were major disruptions in supply chains due to mobility restrictions and a slump in demand due to the loss of livelihoods and incomes. What effect do these offsetting movements have on prices? Which commodities experienced price increases/slumps? Were these localised or widespread across regions? What is the relative contribution of sub-groups to the overall trends? We delve into these issues using wholesale and retail price data to understand the price dynamics in India during COVID-19, using the previous four years as the reference point. The analysis revealed that the retail margins were consistently higher in 2020–2021 indicating the persistence of local shortages for all commodities. Owing to government support through procurement and distribution, the effect on cereals’ prices was minimal. Perishables like vegetables and meat/fish marketed in raw form through informal/petty trade networks, faced maximum erratic behaviour, while milk, marketed in processed form by organised intermediaries, experienced a moderate impact on prices. Fruits, a perishable but with high-income elasticity of demand, witnessed muted prices possibly due to income erosion. Pulses and oils/fats, imported in large quantum, saw a sharp price increase due to local supply bottlenecks combined with international trade disruption.JEL Codes: E31, Q11
Coronavirus disease 2019 (COVID-19) posed a serious challenge to food production and distribution worldwide. There were major disruptions in supply chains due to mobility restrictions and a slump in demand due to the loss of livelihoods and incomes. What effect do these offsetting movements have on prices? Which commodities experienced price increases/slumps? Were these localised or widespread across regions? What is the relative contribution of sub-groups to the overall trends? We delve into these issues using wholesale and retail price data to understand the price dynamics in India during COVID-19, using the previous four years as the reference point. The analysis revealed that the retail margins were consistently higher in 2020–2021 indicating the persistence of local shortages for all commodities. Owing to government support through procurement and distribution, the effect on cereals’ prices was minimal. Perishables like vegetables and meat/fish marketed in raw form through informal/petty trade networks, faced maximum erratic behaviour, while milk, marketed in processed form by organised intermediaries, experienced a moderate impact on prices. Fruits, a perishable but with high-income elasticity of demand, witnessed muted prices possibly due to income erosion. Pulses and oils/fats, imported in large quantum, saw a sharp price increase due to local supply bottlenecks combined with international trade disruption.JEL Codes: E31, Q11
The Russia–Ukraine Crisis Affected Consumer Bullish Market Behaviour Causing Ripple Impressions Across the Global Economy
The Indian Economic Journal, Ahead of Print.
In this article, we analyse how the crisis that emerged in Europe, specifically in Russia and Ukraine, has severely affected European Bull Market. Because of the political unpredictability and the fallout from the most recent sanctions placed on Russia, the financial markets in Europe have often responded negatively to the current geopolitical crisis. The contribution of the Europe Market is the focus of this article, and it does so by analysing several aspects of their behaviour. At the same time, this article contributes to an investigation into the consequences that the proclamation of war against Ukraine had on the stock markets of European countries, global economy and European economy specifically. In addition, the unfavourable reactions shown in stock prices lasted into the post-event period of time. There is a large range of variance in the degree to which stock values are affected by this crisis across sectors, nations, and the size of the firm. This variance may be seen in a wide range of possible outcomes. In addition to its empirical investigation, the research delves into topics pertaining to the marketing modulation as a future scope.JEL Codes: M31-Marketing; F01-Global Outlook; P36-Consumer Economics; G01-Financial Crises
In this article, we analyse how the crisis that emerged in Europe, specifically in Russia and Ukraine, has severely affected European Bull Market. Because of the political unpredictability and the fallout from the most recent sanctions placed on Russia, the financial markets in Europe have often responded negatively to the current geopolitical crisis. The contribution of the Europe Market is the focus of this article, and it does so by analysing several aspects of their behaviour. At the same time, this article contributes to an investigation into the consequences that the proclamation of war against Ukraine had on the stock markets of European countries, global economy and European economy specifically. In addition, the unfavourable reactions shown in stock prices lasted into the post-event period of time. There is a large range of variance in the degree to which stock values are affected by this crisis across sectors, nations, and the size of the firm. This variance may be seen in a wide range of possible outcomes. In addition to its empirical investigation, the research delves into topics pertaining to the marketing modulation as a future scope.JEL Codes: M31-Marketing; F01-Global Outlook; P36-Consumer Economics; G01-Financial Crises
Training and seed production spillovers and technology adoption: The case of seed producer groups in Nepal
Abstract
Rice farmers in developing countries are often vulnerable to drought which can drastically reduce yields. Stress-tolerant rice varieties (STRVs) can mitigate this vulnerability, as can having a high seed replacement rate (SRR) and using best management practices (BMPs) in rice cultivation. However, access to high-quality STRV seed is often limited. This article uses propensity-score weighted regressions to estimate the spillover effects of seed producer groups (SPGs) in Nepal. It compares adoption rates of STRVs and BMPs, and the SRR of non-member households in villages with SPGs and in villages adjacent to these compared to other control villages in the region. According to a range of results from weighted models, non-members in SPG villages and adjacent villages are 24–32 percentage points more likely to have adopted an STRV compared to non-members in control villages. Non-members in SPG and adjacent villages have a higher SRR, and households in SPG villages are more likely to use some BMPs compared to non-members in control villages. Results suggest that SPGs have the potential to improve the resilience of communities in the face of climate change.
Credit cards and commercial insurance participation: Evidence from urban households in China
Abstract
The diffusion of credit cards may have relaxed households' liquidity constraints, thereby stimulating the diffusion of commercial insurance. By investigating Chinese urban households who had no commercial insurance in 2013, we find that their initial access to credit cards significantly increased the likelihood of their holding commercial insurance in 2015. Our instrumental variable (IV) estimations confirm the causality. This positive effect is more pronounced among more liquidity-constrained households and among households with more financial knowledge. Last, the initial access to credit cards also significantly enhanced commercial insurance renewal in 2015 among those households who had commercial insurance in 2013.
Executives’ horizon and trade credit
Abstract
Using executives' decision horizon as a measure of internal governance, this study examines the association between customer's internal governance and supplier's extension of trade credit. Suppliers may extend more trade credit to customers with strong internal governance because of their lower operational risk, higher firm performance, and better information environment. However, firms with better internal governance may have easier access to other sources of financing, and thus may need less trade credit. Using a sample of US listed firms between 1992 and 2021, we find that suppliers extend more trade credit to customers with strong internal governance. We also find that the association between internal governance and trade credit is more pronounced for financially, and informationally constrained firms. Our results are robust to alternative measures and specifications. Incremental to prior studies, we show that effectiveness of customers' internal governance affects suppliers' lending decisions.