NBER Reporter articles from March 2000

NBER Reporter archives from March 2000

Corporate Finance.
March 22, 2000... Raghuram G. Rajan [*] The NBER's Corporate Finance Program was established in 1991 with Robert W. Vishny as its first director; I became Program Director in 1998. Corporate finance, narrowly interpreted, is the study of the investment and...

Economic Impacts of Environmental Policies.
March 22, 2000... Lawrence H. Goulder [*] Over the last three decades in the United States and other nations, there has been a significant increase in the use of economic analysis to guide the design and evaluation of environmental policies. Economic...

International Taxation.
March 22, 2000... James R. Hines Jr. [*] The ability and evident willingness of taxpayers to relocate activity, to shift taxable income between jurisdictions, and to respond to incentives created by the interaction of domestic and foreign tax rules, mean...

Local Corruption and the Global Economy.
March 22, 2000... Shang-Jin Wei [*] Corruption, like cockroaches, has co-existed with human society for a long time. Its role in economic development is controversial. According to Samuel P. Huntington, the distinguished Harvard political scientist "[i]n...

John H. Cochrane.(Brief Article)
March 22, 2000... John H. Cochrane directs the NBER's Program on Asset Pricing and is the Sigmund E. Edelstone Professor of Finance and Economics at the University of Chicago. He began his affiliation with the NBER in 1988 as a Faculty Research Fellow, was...

Lawrence H. Goulder.(Brief Article)
March 22, 2000... Lawrence H. Goulder is a Research Associate in the NBER's Program in Public Economics. He is also an Associate Professor of Economics at Stanford University, a Senior Fellow of Stanford's Institute for International Studies, and a University...

Shang-Jin Wei.(Brief Article)
March 22, 2000... Shang-Jin Wei is a Faculty Research Fellow in the NBER's Programs on International Finance and Macroeconomics and on International Trade and Investment. He is also an Associate Professor of Public Policy at Harvard University's Kennedy School...

Nishizaki and Watanabe.(Japanese consumer price index)(Brief Article)(Statistical Data Included)
March 22, 2000... Japanese consumer price index (CPI) inflation rates have been declining since the first quarter of 1991. Ranging only between zero and 1 percent in 1996 and 1997, the CPI inflation rates have been negative since the third quarter of 1998. Using...

Orphanides and Wieland.
March 22, 2000... Orphanides and Wieland study the design of monetary policy in a low inflation environment, taking into account the limitations imposed by the zero bound on nominal interest rates. They focus on the portfolio balance channel through which...

Uhlig.(Liquidity traps)
March 22, 2000... Uhlig attempts to gain more insight into liquidity traps, Friedman's rule, and runaway deflation. He first finds that Friedman's rule can be implemented by shrinking the money stock at the appropriate rate over the long run. Therefore,...

Clarida.(G3 exchange rates)
March 22, 2000... Clarida reviews G3 exchange rate relationships since the collapse of Bretton Woods and analyzes recent proposals for changing the way the G3 countries conduct exchange rate policy. Advocates of these proposals have assessed the global costs of...

Miyao.(on Japan's monetary policy in the 1990s)(Brief Article)
March 22, 2000... Miyao documents time-series evidence suggesting the case for a possible structural break in the role of Japan's monetary policy during the 1990s. While he detects a persistent effect of monetary policy on real output both between 1975 and 1998...

Ogawa.(overview of monetary transmission in Japan)(Brief Article)
March 22, 2000... Ogawa analyzes the mechanism of monetary transmission in the Japanese economy. Using quarterly time-series data disaggregated by firm size, he examines the channels through which monetary policy influences the important items on the firms'...

Krugman.(Brief Article)
March 22, 2000... Krugman shows that the liquidity trap is not an artifact of the IS-LM model's incompleteness: even in a "modern" macroeconomic model based on intertemporal utility maximization by a representative agent, the liquidity trap can arise. Krugman...

Barth, Caprio, and Levine.(information on international commercial bank regulation and ownership practices)(Brief Article)
March 22, 2000... Barth, Caprio, and Levine collect cross-country data on commercial bank regulation and ownership in more than 60 countries and evaluate the links between their different regulatory/ownership practices and financial sector performance and...

Berger, Kyle, and Scalise.
March 22, 2000... Berger, Kyle, and Scalise investigate the possibility that overall changes in supervisory "toughness" may significantly affect bank lending behavior and may potentially affect macroeconomic or regional economic health. They use information on...

Kroszner and Strahan.(Federal Deposit Insurance Act)(Brief Article)
March 22, 2000... Kroszner and Strahan provide a positive political economy analysis of the most important revision of the U.S. supervision and regulation system during the last two decades, the 1991 Federal Deposit Insurance Corporation Improvement Act...

Bliss and Flannery.(Brief Article)
March 22, 2000... Bliss and Flannery note that effective market discipline involves two distinct components: the ability of security holders to accurately assess the condition of a firm (monitoring) and the ability to have their assessments reflected in...

Samwick and Wise.(Brief Article)
March 22, 2000... Do financial incentives designed to delay retirement actually work? Using Health and Retirement Study data, Samwick and Wise find that both pension wealth and pension incentives have statistically significant effects on the probability of...

Kawamura, Kadoda, and Ogura.(Brief Article)
March 22, 2000... Kawamura, Kadoda, and Ogura suggest that Japan's elderly health care system and its National Health Insurance (NHI) programs together have created a crisis in Japanese public health insurance. The two systems transfer funds from corporate...

Abe.(social insurance programs of Japanese female part-time workers)(Brief Article)
March 22, 2000... Abe documents patterns of participation in social insurance programs by female part-time workers in Japan and asks how the structure of the social insurance system affects that participation. Because participation in social insurance programs...

Cutler.(supplemental medical insurance)(Brief Article)
March 22, 2000... Cutler considers the rationale and economic effects of allowing supplemental medical insurance to exist. Countries may allow three types of insurance supplements: insurance for uncovered services, which most countries allow; insurance to pay...

Yamada.(cost-effectiveness of medical checkups as preventive medical care in Japan)(Brief Article)
March 22, 2000... Good health enhances market earnings by increasing the number of days that employees work and by increasing their nonmarket productivity in terms of time spent on household production. And, health checkups are one way to secure good health....

Ogura and Hagino.(prescription drug plan expenditures)(Brief Article)
March 22, 2000... In Japan, prescription drug expenditures account for a huge proportion of total health care costs. Among five major countries, Japan and France each rank at the top in absolute terms for per-patient drug costs, spending more than three times as...

Tachibanaki.(Japanese corporate welfare provision contributions)(Brief Article)
March 22, 2000... Tachibanaki presents five theoretical justifications that explain why firms contribute to welfare provisions: 1) agency theory, 2) tax advantage, 3) employees' preference, 4) cost savings, and 5) improved industrial relations. He then shows...

Kato.(Japanese corporate participatory employment practices)(Brief Article)
March 22, 2000... Kato shows that Japanese firms have continued to use participatory employment practices, even during the overall economic slowdown in the 1990s and the recent financial crisis at the end of the decade. However, he points to a few early signs of...

Genda.(Young workers in Japan)(Brief Article)
March 22, 2000... Young workers likely face more difficulty than middle-aged or senior workers in finding full-time jobs in an aging Japanese society. Yet job opportunities for middle-aged and senior employees are being maintained and protected, while no clear...

Chuma.(human relations practices in the Japanese machine tool industry)(Brief Article)
March 22, 2000... Japan has led the world in machine tool production since 1982. In examining how the Japanese machine tool industry has achieved this record, Chuma maintains that human relations practices have been especially important. He finds that a...

Freeman.
March 22, 2000... In the 1990s, many analysts viewed the United States as the peak capitalist economy, whose institutions other countries would be wise to emulate. By contrast, in the 1970s and 1980s, many analysts viewed Japan as the peak capitalist economy....

Nakata.(Brief Article)
March 22, 2000... People have long believed that Japanese firms, particularly large ones, have upheld their employment commitments to workers despite any unfavorable economic conditions. But now, this practice has been criticized as the major cause of the...

Ohtake.(Brief Article)
March 22, 2000... Ohtake hypothesizes that the presence or absence of a union influences the effectiveness of internal and external threats in reducing non-attendance. He argues that, because unions reduce the potency of threats of job loss (by making it more...

Roubini.(Crony capitalism in Korea)(Brief Article)
March 22, 2000... In the first session, there was an evident split on the panel between those who see the crisis as the product of severe structural weaknesses in the economy and those who see it mainly as a liquidity crisis. To those who hold the first view,...

K. N. Lee.(South Korea creditor panic)(Brief Article)
March 22, 2000... In the second session the panelists considered how the creditor panic of late 1997 and early 1998 was resolved. Among the questions considered: How did the late-December 1997 program differ from the earlier December 4 program? What was the...

J. W. Lee.(Questions on South Korea recovery)(Brief Article)
March 22, 2000... In the third session the focus moved to the actual progress in financial and corporate sector reform. Session chairman J. W. Lee also posed two important questions for consideration in the session. First, referring to Korea's famous V-shaped...

Chopra.(South Korea and Mexico)(Brief Article)
March 22, 2000... Chopra opened by stressing the IMP's heavy emphasis on promoting recovery. In charting the Korean recovery, he then used Sweden, Finland, and Mexico as standards of comparison. Next Oh offered the perspective of a Korean financial supervisor....

Feldstein.(South Korea crisis)(Brief Article)
March 22, 2000... Feldstein opened the final session by questioning the wisdom of the IMF and World Bank's drive to reform the economy along multiple dimensions, He asked if they would have done that for any other OECD country. Arguing that there was a need to...

Gruber and Wise.(Social Security)(Brief Article)
March 22, 2000... In their overview paper, Gruber and Wise explain the various problems that social security systems currently face. They then describe and comment on different approaches to addressing these problems, from incremental measures to a complete...

Jousten and Pestieau.(Social security in Europe)(Brief Article)
March 22, 2000... Jousten and Pestieau discuss the main characteristics of mandatory pension systems in Europe and the implications of these systems for increasing factor mobility. Increased mobility of labor, the authors suggest, leads to a decrease in the...

Lindbeck.(Brief Article)
March 22, 2000... Lindbeck analyzes how different types of pension systems transmit socioeconomic shocks to individuals and how the incentive structures of these pension systems induce socioeconomic changes. The relationship between socioeconomic development and...

Rurup.(Brief Article)
March 22, 2000... R[ddot{u}]rup discusses how introducing a mandatory supplementary funded pillar to Germany's existing pay-as-you-go pension system could help to maintain the system's financial stability and provide for Germans' old-age security.

Blanchet.(Brief Article)
March 22, 2000... Blanchet outlines the French debate over pension reform that took place during the 1990s and the reforms implemented in that period. He focuses on the role that savings--be they from life insurance, employee savings schemes, or pension...

Franco.(Italian pension reform)(Brief Article)
March 22, 2000... In reviewing the Italian pension system, Franco finds that some reform is necessary to ensure the system's long-term fiscal sustainability. The reforms implemented so far, while not without impact from the fiscal perspective, have been...

Lassila and Valkonen.(Finnish pension funds)(Brief Article)
March 22, 2000... Lassila and Valkonen describe the Finnish pension system, which consists of both national minimum pensions and earnings-related pensions. The earnings-related pensions are partly funded, while the minimum pensions are financed entirely on a...

Kremers.(Brief Article)
March 22, 2000... Kremers argues that the Dutch pension system is perhaps the most funded collective pension system in the world: it combines a basic pension with a compulsory and fully funded second pillar. Because of that second pillar, the system is...

Palmer.(Swedish pension funds)(Brief Article)
March 22, 2000... Palmer describes the main features of the Swedish pension reform of 1994, which may be seen as a paradigm shift in thinking about the provision of public pensions. Sweden now has a two-pillar public pension system: a pay-as-you-go pension as...

Hausner.(Polish pension funds)(Brief Article)
March 22, 2000... Hausner explores the reasons behind the financial insolvency of the Polish pension system and describes the nature of the newly introduced multipillar system. He finds, however, that Poland's pension reform program remains incomplete: the major...

Rocha and Vittas.(economists)(Brief Article)
March 22, 2000... Rocha and Vittas review the main components and objectives of the Hungarian pension reform and preliminarily assess the first two years of its implementation. They find that the overall reforms can be called a success, although substantial...

De Menil and Sheshinski.(economists)(Brief Article)
March 22, 2000... De M[acute{e}]nil and Sheshinski discuss Romania's prereform situation and the architecture of its new public and private pension system. The authors evaluate budgetary implications and economic effects and conclude that, in a country lagging...

Acemoglu and Angrist.(Education returns)(Brief Article)
March 22, 2000... Many economists and policymakers believe that education creates positive externalities. Indeed, the average level of schooling in the U.S. states is highly correlated with state wage levels, even after the direct effect of schooling on...

Drazen.(economist)(Brief Article)
March 22, 2000... Drazen surveys and assesses previous research on the political business cycle since the mid-1970s. He argues that models based on monetary surprises as the driving force are unconvincing explanations of either opportunistic or partisan cycles....

Morris and Shin.(economists)(Brief Article)
March 22, 2000... Morris and Shin investigate whether beliefs are as indeterminate as models with multiple equilibriums suggest. Multiple equilibriums may be the unintended consequence of two modelling assumptions: that fundamentals are commonly known, and that...

Cole and Ohanian.(economists)(Brief Article)
March 22, 2000... Using general equilibrium models, Cole and Ohanian evaluate the contribution of deflationary money shocks (operating through imperfectly flexible wages in certain sectors) and financial intermediation shocks (operating through bank failures) to...

Rodriguez and Rodrik.(economists)(Brief Article)
March 22, 2000... Do countries with lower policy-induced barriers to international trade grow faster than other countries, once other relevant characteristics are taken into account? Rodriguez and Rodrik argue that in many cases, the indicators of "openness"...

Obstfeld and Rogoff.(economists)(Brief Article)
March 22, 2000... Obstfeld and Rogoff claim that by explicitly introducing costs of international trade (narrowly, transport costs, but more broadly, tariff and nontariff barriers), economists can explain a number of the central empirical puzzles that they have...

Henderson and Cockburn.(economists)(Brief Article)
March 22, 2000... U.S. taxpayers funded $14.8 billion of health-related research last year, four times the amount that was spent in 1970 in real terms. Henderson and Cockburn evaluate the impact of these huge expenditures on the technological performance of the...

Kremer.(economist)(Brief Article)
March 22, 2000... Kremer describes the economic rationale for committing in advance to purchase vaccines once they are developed. Historically, governments have stimulated vaccine research by paying for research inputs, for example through grants to researchers....

Shapiro.(economist)(Brief Article)
March 22, 2000... Shapiro finds that in several key industries, including semiconductors, biotechnology, computer software, and the Internet, the current system is creating a "patent thicket": an overlapping set of patent rights requiring that those seeking to...

Greenstein.(economist)(Brief Article)
March 22, 2000... Why did commercialization of the Internet go so well? Greenstein examines events in the Internet access market and emphasizes three themes. First, commercializing Internet access did not give rise to many of the anticipated technical and...

Mowery and Ziedonis.(economists)(Brief Article)
March 22, 2000... Mowery and Ziedonis find that the Bayh-Dole Act had only a modest effect on the content of academic research and patenting at Stanford and the University of California. The most significant change in the content of research at these...

Romer.(economist)(Brief Article)
March 22, 2000... Romer suggests that innovation policy in the United States has erred by subsidizing the private sector demand for scientists and engineers without asking whether the educational system encourages the supply response necessary for these...

Reiss and White.(economists)(Brief Article)
March 22, 2000... Reiss and White develop a model of household demand for electricity and use it to assess the consequences of restructuring the electric industry in California. Using data for a representative sample of California households, they also derive...

Genesove.(economist)(Brief Article)
March 22, 2000... Genesove shows that the move to offset printing from letterpress in the daily newspaper industry in the United States was determined in part by the structure of the local market. In monopoly markets, low circulation papers were quicker to adopt...

Rysman.(economist)(Brief Article)
March 22, 2000... Rysman studies the welfare trade-off between competition and monopoly in a market characterized by network effects: the market for Yellow Pages directories. A competitive market with many small directories will fail to take advantage of the...

Dranove, Kessler, McClellan, and Satterthwaite.(economists)(Brief Article)
March 22, 2000... Dranove, Kessler, McClellan, and Satterthwaite develop a framework for analyzing the competing arguments about the value of health care quality report cards. These report cards are public disclosures of patient health outcomes at the level of...

Morton and Zettelmeyer.(economists)(Brief Article)
March 22, 2000... Morton and Zettelmeyer examine why a retailer would want to introduce a store brand in a particular category. Store brands differ from other brands in that they are unadvertised and their location "on the shelf" is determined by the retailer...

Waldfogel.(Brief Article)
March 22, 2000... Theory predicts that in markets with increasing returns the number of differentiated products -- and resulting consumer satisfaction -- grow with market size. Waldfogel documents this phenomenon for 246 U.S. radio markets. By a mechanism that...

Chevalier.(economist)(Brief Article)
March 22, 2000... Using a sample of firms that undertook diversifying mergers between 1980 and 1995, Chevalier examines the investment behavior of these firms prior to their mergers. She shows that the investment patterns attributed in the literature to...

Bajari and Hortacsu.(economists)(Brief Article)
March 22, 2000... Online auctions recently have gained widespread popularity and are one of the most successful forms of electronic commerce. Bajari and Hortacsu examine a dataset of eBay coin auctions to explore features of online bidding and selling behavior....

Davis and Willen.(asset returns and income shocks)(Brief Article)
March 22, 2000... Davis and Willen characterize the covariance of asset returns and shocks to labor income for a hypothetical group of individuals defined in terms of gender, education, and age. They find that the correlation between income shocks and equity...

Lusardi.(Brief Article)
March 22, 2000... Lusardi shows that there are vast differences in wealth holdings among U.S. households, even in similar age groups. Further, a large percentage of U.S. households near retirement have little or no wealth. Approximately 30 percent of such...

Alvarez and Jermann.(Marginal cost of consumption fluctuations)(Brief Article)
March 22, 2000... Alvarez and Jermann measure the "marginal cost of consumption fluctuations," that is the benefit of a small reduction in consumption fluctuations. They show that this measure is an upper bound to the benefits of reducing all consumption...

Kremer and Chen.(Mental workers in developing nations)(Brief Article)
March 22, 2000... Kremer and Chen note that developing countries with highly unequal income distributions, such as Brazil or South Africa, face an uphill battle in reducing inequality. Educated workers in these countries have a much lower birthrate than that of...

Blanchard and Wolfers.(European unemployment)(Brief Article)
March 22, 2000... Two key facts about European unemployment must be explained: the rise in unemployment since the 1960s and the diversity of experiences in the individual countries. While adverse shocks potentially explain much of the rise in unemployment, there...

Gilchrist and Williams.(Postwar Germany and Japan)(Brief Article)
March 22, 2000... Gilchrist and Williams consider a neoclassical interpretation of postwar growth in Germany and Japan that relies on a catch-up mechanism through capital accumulation in which technology is embodied in new capital goods. They emphasize that the...

Jaffee and Russell.(Brief Article)
March 22, 2000... Jaffee and Russell use the example of the California Earthquake Authority (CEA), the quasi-state agency organized in 1996 to replace the private market for earthquake insurance in California, and its customers to study a catastrophe insurance...

Cummins and Mahul.(Brief Article)
March 22, 2000... Cummins and Mahul develop a theoretical model of optimal contracting for financing large, infrequent events in which the payoffs are subject to both default risk and basis risk. Full insurance above a deductible is optimal when both parties...

Grace, Klein, and Kleindorfer.(Price variation in homeowners insurance)(Brief Article)
March 22, 2000... Grace, Klein, and Kleindorfer find that price variation across states in homeowners insurance is significant and not explained completely by expected losses. Nearly every feature of homeowners policies and company characteristics is associated...

Kunreuther and Pauly.(Brief Article)
March 22, 2000... Many individuals one would expect to have insurance (for example, subsidized flood insurance) do not have coverage, while others who appear not to need protection against certain events actually have purchased a policy (for example, flight...

Brown, Mitchell, and Poterba.(IRA's)(Brief Article)
March 22, 2000... Brown, Mitchell, and Poterba explore four issues concerning annuitization options that retirees might use in the decumulation phase of an "individual accounts" retirement saving system. First, they investigate the operation of both real and...

Moss.(Government risk management)(Brief Article)
March 22, 2000... Moss presented a draft chapter on Social Security from his book in progress (tentatively titled When All Else Fails) about the government's role as a risk manager. In this chapter, he explores the pivotal risk management logic underlying...

Grace and Phillips.(Regulation of insurance)(Brief Article)
March 22, 2000... Grace and Phillips investigate the incentives that states have to regulate insurance products in an efficient manner. Regulation of the insurance industry in the United States is unique in that it is conducted primarily at the state level while...

Myers and Read.(Brief Article)
March 22, 2000... Myers and Read show how option pricing methods can be used to allocate an insurance company's surplus across different lines of insurance. The first step is to calculate a default value, that is the premium that the company would have to pay in...

Hendel and Lizzeri.(Brief Article)
March 22, 2000... Hendel and Lizzeri focus on the life insurance industry and ask how contracts are designed to deal with classification risk. Their model captures the main features of this industry, and the data are especially suited for a test of their theory,...

Rousseau.(1837 banking crisis)(Brief Article)
March 22, 2000... The Panic of 1837 was among the most severe banking crises in U.S. history, marking the start of a business downturn from which the nation did not recover for six years. Because the panic had serious consequences for the rapidly evolving...