Economics

Cesarean section rates vary widely across U.S. counties, yet it remains unclear how much of this variation reflects demand-side factors (such as patient risk or preferences) versus supply-side factors (such as physician practices or hospital incentives). We develop a new empirical strategy to isolate the influence of supply-side forces. Exploiting hospital obstetric unit closures from 1989–2019 that reallocate some mothers to counties with different C-section rates, we find that a one–percentage-point increase in the delivery county’s rate raises a mother’s likelihood of a C-section by roughly one point. The results point to a dominant role for provider behavior and local practice no..

We introduce an asset supply-and-demand approach to analyze the trajectory of US aggregate wealth, real interest rates, and fiscal sustainability. Our framework uses micro-founded and easy-to-implement sufficient statistics to quantify how shifts in demographics, inequality, and other forces affect asset market equilibrium. From 1950 to the present, rapid population aging, rising income inequality, increasing foreign demand for US assets, and declining productivity growth all contributed to a surge in asset demand. Asset supply initially fell, then turned around sharply, mainly driven by increases in government debt and the value of capitalized profits. Overall, asset demand won the race, an..

Continuation funds (CFs) are private equity structures in which a manager raises a new fund to purchase assets from their existing fund. This structure has surged in popularity, from five funds in 2018 to 130 in 2024. We use a hand-collected sample of 472 CFs to test a model in which heterogeneous preferences drive CFs. Consistent with the model’s predictions, CFs emerge when LPs are more heterogeneous and managers have earned carried interest that they can roll. LPs typically choose to exit rather than invest, with this decision driven by both LP-level frictions and time varying LP liquidity demands.

Responses to surveys eliciting evaluations of trust in government, both generally and in specific areas, have varied over time and across countries. Using consistent survey data for 34 OECD countries from 2007-2023, we estimate a model of factors determining levels of trust. We employ a series of econometric techniques of increasing sophistication. The level and growth rate of real income per capita, social spending per capita, the degree of decentralization, and economic freedom all exert positive effects on trust. Inflation, unemployment, and debt per capita negatively affect trust. Additionally, higher levels of human capital and the elderly share of the population negatively affect trust..

We develop a step-by-step guide to leniency (a.k.a. judge or examiner instrument) designs, drawing on recent econometric literatures. The unbiased jackknife instrumental variables estimator (UJIVE) is purpose-built for leveraging exogenous leniency variation, avoiding subtle biases even in the presence of many decision-makers or controls. We show how UJIVE can also be used to assess key assumptions underlying leniency designs, including quasi-random assignment and average first-stage monotonicity, and to probe the external validity of treatment effect estimates. We further discuss statistical inference, arguing that non-clustered standard errors are often appropriate. A reanalysis of Farre-M..

We study settlement frictions that arise from the need to finance negative balances through an over-the-counter (OTC) market. We derive a closed-form expression for the endogenous convenience yield and show how it can be incorporated into a canonical portfolio problem. Using this framework, we examine how shifts in settlement frictions affect liquidity premia, the volume of overnight funding, the dispersion of market rates, and optimal portfolio allocations. From a normative perspective, we show that in the competitive equilibrium, investors may either over- or under-invest in liquid assets; moreover, both higher risk aversion and tighter aggregate liquidity increase the likelihood of under-..

The GENIUS Act, recently signed into law, establishes a dual federal and state regulatory framework for stablecoins, effectively segmenting the USD stablecoin market into GENIUS-compliant stablecoins and those that are not. This paper discusses the use cases and potential benefits of stablecoins in terms of payment system efficiency and costs, as well as their substitutability with money market mutual funds and bank deposits. It then analyzes the financial stability risks associated with both GENIUS-compliant and unregulated stablecoins using empirical analysis and historical case studies. It concludes by discussing the economic implications of the emergence of a large dollar stablecoin ecos..

Taxation based on identity has a long, often sordid history, and persists to this day, usually with some subtlety. It is a relatively tame cousin of the blatant, violent, and genocidal policies that have targeted people of certain religions, races, and genders for millennia. It is, nevertheless, an issue to be confronted rather than ignored by public finance economists. This is especially true because the concept of identity played a prominent role in the US presidential election of 2024, and is likely to be at least an undercurrent to the policy debates beginning in 2025, including those concerning tax policy. Tax based on identity is difficult, although not impossible, to justify within st..

This essay surveys the literature on middlemen—i.e., intermediation in exchange—reviewing, extending and consolidating key developments in the field. This is important because intermediated trade is common in reality but absent in standard general equilibrium theory. We focus on research using search theory. In various models, agents may act as middlemen when they are good at search, bargaining, recognizing quality, storing inventories, using credit, etc. The theory applies to markets for goods, inputs or assets. We discuss versions with indivisible or divisible goods, fixed or endogenous participation, stationary and dynamic equilibria, and some implications for efficiency and volatilit..

We document some underappreciated aspects of the recent evolution of the international reserve system. These include the growing share of gold in global central bank reserves, the continuing emergence of nontraditional reserve currencies, and the stalling share of renminbi in reserves. These trends are consistent with our findings in our earlier papers. In addition we look to the future, pondering the potential implications of dollar-linked stablecoins, the expansion of the BRICS grouping of countries and their de- dollarization plans, the development of blockchain-based platforms such as Project mBridge for the direct exchange of central bank digital currencies, and questions about the doll..

We develop a novel, scalable method for assessing the quality of public procurement systems using standard administrative data. Our approach compares the distribution of procurement opportunities to the distribution of contract awards across firms. We first derive a simple theoretical benchmark that relates the expected distribution of contract value winning firms, measured as a Herfindahl–Hirschman index (HHI), to the distribution of auction values, measured as a respective HHI, and the number of winning firms. Significant deviations of winning firms’ HHI from this benchmark indicate potential governance failures such as corruption or unchecked collusion. Our method requires no subjecti..

This paper studies the labor market effects of recent state-level policies that require employers to disclose salary information in job postings. Leveraging a difference-in-differences design, we show that employers increased the fraction of postings with salary information by 30 percentage points. Across three datasets, we find consistent evidence of an increase in wages of 1.3-3.6%. We find no impacts on pay dispersion, employment, the number of postings, or skill and education requirements. Our evidence is consistent with pay transparency increasing competition in the labor market, leading to positive spillovers on incumbent workers and always-posting firms.

Two robust empirical facts are that mean wages and cross-sectional wage dispersion both increase over the life cycle. We study how these two changes vary across occupations and document a strong positive correlation: occupations with high mean wage growth over the life cycle also exhibit greater increases in cross-sectional wage dispersion. We develop a novel dynamic Roy model that features both static and dynamic comparative advantage and show that it can account for the variation in life cycle wage distributions across high and low wage occupations. Dynamic comparative advantage reflects individual heterogeneity in occupation specific learning abilities and is the dominant force that shape..

This paper examines the impact of classroom exposure to peers with a history of violent behavior on academic achievement and the underlying mechanisms. This measure of peer violence departs significantly from earlier studies that measured potential peer violence based on the background characteristics of students. We exploit idiosyncratic treatment variations during the transition from primary to middle school for causal identification. We find that a higher proportion of violent peers negatively affects cognitive performance in tests in various subjects, particularly pronounced in mathematics and English, compared to Hebrew and science. These effects are more pronounced in girls than in boy..