Quantitative Easing Stimulated the Economy,
Kept Inflation from Falling, and Gave Fed a New Tool
At the height of the Great Recession, with the Federal Reserve's capacity to lower interest rates limited by the zero lower bound, the Fed announced it would begin purchasing mortgage-backed securities — essentially filling the role of an investment bank or hedge fund at a time when the private markets were in disarray. Mark Gertler of New York University and the NBER explains how the use of this new tool worked out.
Chinese institutional investors underweight developed countries and high-tech sectors in their international portfolio allocations, overinvest in high-tech stocks in developed countries, and overweight sectors in which China has a comparative disadvantage, according to an analysis by Isha Agarwal, Grace Weishi Gu, and Eswar S. Prasad.
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.
How Republican and Democratic Investors
Reacted to the Outcome of the 2016 Election
The marked change in national leadership — both at the level of individual politicians and national parties — following the 2016 election produced a sharp change in investment behaviors, as households in predominantly Democratic zip codes tended to sell out of the stock market and buy into safe assets while those in Republican dominated zip codes bought into the market and sold safe assets to finance those investments. A study of why that happened was made by Jonathan A. Parker, Maarten Meeuwis, Antoinette Schoar, and Duncan I. Simester.
An investigation of the long-term effects of a microcredit program on households in Hyderabad finds that access to the program offering small loans had strong positive effects for households that were already engaged in “gung-ho” entrepreneurship and almost no effect for others, according to a paper summarized in the new edition of the NBER Digest. Also featured in the December issue of the free monthly publication are studies of grocery prices’ effects on consumers’ inflation expectations, strict school discipline’s impacts on adult outcomes, free legal services’ influences on American family structure, bankruptcy law reform’s contribution to a decline in filings, and the phenomenon of women under-selling themselves.
Two New NBER Books Explore
Productivity in Education and Agriculture
Productivity in Higher Education
How do the benefits of higher education compare with its costs, and how does this vary across individuals and institutions? Productivity in Higher Education uses rich and novel administrative data, modern econometric methods, and deep institutional understanding to explore these issues. Researchers examine the returns to undergraduate education, differences in costs by major, the productivity of for-profit schools, the productivity of various types of faculty, the effects of online education on the market, and the ways in which the productivity of institutions responds to market forces. Edited by Caroline M. Hoxby and Kevin Stange.
While agricultural yields have increased steadily in the last half century, inflation-adjusted agricultural commodity prices have been trending downward as increases in supply outpace the growth of demand. Yet recent severe weather events, biofuel mandates, and a switch toward a more meat-heavy diet in emerging economies have boosted prices. Whether this is a temporary jump or the beginning of a longer-term trend is an open question. Agricultural Productivity and Producer Behavior explores issues including potential environmental consequences of yield growth, genetically modified crops, changing climatic factors, production responses to government regulations, and the role of crop diversification, disease management, and water-saving methods. Edited by Wolfram Schlenker.