If Unconventional Policies Are Swiftly Adopted,
the Zero Lower Bound May Actually Be Irrelevant
The global financial crisis of 2007–08 and the recession that followed led many central banks to lower rates down to near zero — their theoretical lower bound. Given the impossibility of further reductions in the short-term nominal rate, which is the usual instrument of monetary policy in normal times — central banks increasingly relied on unconventional monetary policies. A study presented at this year's NBER Annual Conference on Macroeconomics found that, in the case of the United States, it worked.
Roughly 60 percent of the Oakland’s sugar-sweetened beverage tax was passed on to consumers, but there was no substantial change in consumption of sugar-sweetened beverages, research by John Cawley, David E. Frisvold, Anna Hill, and David Jones shows.
Analyzing data from a randomized controlled experiment associated with an anti-drunk driving campaign in Rajasthan, India, Abhijit Banerjee, Esther Duflo, Daniel Keniston, and Nina Singh find that rotating the location of checkpoints reduced night accidents by 17 percent and night deaths by 25 percent, while fixed checkpoints had no significant effects.
The fall issue of the Bulletin on Health features a study of increases in Medicaid reimbursement rates that were federally mandated from 2013 to 2015. This policy change increased Medicaid payments for certain primary care services by 60 percent, on average, and substantially reduced geographic dispersion in the level of payments. Researchers find that the increased reimbursement expanded access to care, improved self-reported health, and reduced school absences among primary school-aged children. Also featured in the fall issue of the Bulletin on Health are studies of birth outcomes at hospitals with relatively high c-section rates, and the longevity of Medicare beneficiaries who move from one location to another.
Tax Policy and the Economy Conference Focuses
on Impacts of Changes in Laws and Regulations
The 34th annual conference of the NBER's Tax Policy and the Economy Project was held at the National Press Club in Washington. Research papers were presented on the effect of the Affordable Care Act on business size, how the 2017 tax cuts and reforms are expected to influence charitable giving, the influence of tax wedge changes on organizational forms, options for encouraging "emergency" savings, and alternatives to the current structure of Medicare.
The Common Application, a program used by more than 700 colleges and universities that enables students to fill out a single application to apply for admission to multiple schools, has caused total applications and applications from out-of-state and foreign students to increase sharply, research featured in the latest edition of the NBER Digest shows. Also featured in the November issue are working papers examining: new strategies for improving tax collection in developing countries, the impacts of foreclosures on the housing market, the few places where most American inventors live, the first four years of the Affordable Care Act, and signs of stagnation in the developed world's economy.
Evidence suggests that in the conflict in Afghanistan a US military investment in the billions of dollars yearly, directed at countering improvised explosive devices, was effectively countered by insurgent technological adaptation and investments of tens of millions of dollars, according to research featured in the current edition of the NBER Reporter. Also in this issue of the free NBER quarterly are reports on declining US productivity growth, long-term unemployment, evidence-based health care policy, and belief formation.
Abhijit Banerjee, Esther Duflo, and Michael Kremer Win Nobel Prize
for Experimental Research Methods that Transformed Development Economics
Esther Duflo Michael Kremer
Abhijit Banerjee and Esther Duflo of MIT, and Michael Kremer of Harvard University, all of whom are long-serving NBER research associates, were awarded the 2019 Nobel Prize in Economic Sciences. The prize recognizes their contributions to development economics and the study of global poverty, in particular their championing of randomized controlled trials as methodologies for analyzing how a wide range of policy interventions – in health, education, credit markets, and local governance, among others – can contribute to poverty alleviation.