• Reviewing Academic Literature: Service, Lament, and Offer

    Another dump of new NBER papers just came through. There are several I’d like to read and possibly summarize for this blog. As a service, I’m including the abstracts for those below. My lament is that I may not get to them all. There is too much to read and not enough time. And this is just a small slice of the new literature from all sources.

    Hence, this offer: if anyone out there reads any of these and wants to send a guest post summary I’ll consider posting. I can’t promise publication in advance or else that blows any chance at quality control. FYI, I’ve printed the last one listed, on empirical industrial organization, because it is most relevant to my work. If I summarize any of these for this blog that one will be first.

    Economics of estate taxation: a brief review of theory and evidence use, Wojciech Kopczuk, NBER Working Paper No. 15741. This paper provides a non-technical overview of the economic arguments related to the desirability of transfer taxation and a summary of empirical evidence surrounding these issues. Understanding optimal transfer taxation throughout the distribution requires understanding the nature of a bequest motive, a topic on which there is little consensus. However, I argue that progress still can be made on the question of desirability and optimal level of estate taxation at the top of the distribution, because interpersonal externalities implied by the presence of bequest motive are irrelevant from the welfare point of view when the focus is on the wealthy. I also examine the role of negative externalities from wealth concentration in providing justification for considering this type of taxation.

    Students Choosing Colleges: Understanding the Matriculation Decision at a Highly Selective Private Institution, Peter Nurnberg, Morton Schapiro, David Zimmerman,  NBER Working Paper No. 15772. The college choice process can be reduced to three questions: 1) Where does a student apply? 2) Which schools accept the students? 3) Which offer of admission does the student accept? This paper addresses question three. Specifically, we offer an econometric analysis of the matriculation decisions made by students accepted to Williams College, one of the nation’s most highly selective colleges and universities. We use data for the Williams classes of 2008 through 2012 to estimate a yield model. We find that—conditional on the student applying to and being accepted by Williams—applicant quality as measured by standardized tests, high school GPA and the like, the net price a particular student faces (the sticker price minus institutional financial aid), the applicant’s race and geographic origin, plus the student’s artistic, athletic and academic interests, are strong predictors of whether or not the student will matriculate.

    Foreclosures, Enforcement, and Collections under the Federal Mortgage Modification Guidelines, Casey B. Mulligan,  NBER Working Paper No. 15777.  Federal mortgage modification initiatives, targeting millions of borrowers, are intended to prevent foreclosures of underwater home mortgages. Those initiatives discourage principal reductions in favor of interest reductions, despite the possibility that the former would be a more durable foreclosure prevention tool. The programs also impose marginal income tax rates substantially in excess of 100 percent. Using the framework of optimal income taxation, this paper shows how alternative means-tested modification rules would simultaneously improve collections, efficiency, the number of foreclosures, and their total cost. As a result, lenders have an incentive to foreclose on borrowers deemed modification eligible by the federal programs.

    “Unfunded Liabilities” and Uncertain Fiscal Financing, Troy Davig, Eric M. Leeper, Todd B. Walker,  NBER Working Paper No. 15782.  We develop a rational expectations framework to study the consequences of alternative means to resolve the “unfunded liabilities” problem—unsustainable exponential growth in federal Social Security, Medicare, and Medicaid spending with no plan to finance it. Resolution requires specifying a probability distribution for how and when monetary and fiscal policies will change as the economy evolves through the 21st century. Beliefs based on that distribution determine the existence of and the nature of equilibrium. We consider policies that in expectation combine reaching a fiscal limit, some distorting taxation, modest inflation, and some reneging on the government’s promised transfers. In the equilibrium, inflation-targeting monetary policy cannot successfully anchor expected inflation. Expectational effects are always present, but need not have large impacts on inflation and interest rates in the short and medium runs.

    Empirical Industrial Organization: A Progress Report, Liran Einav, Jonathan D. Levin,  NBER Working Paper No. 15786. The field of Industrial Organization has made dramatic advances over the last few decades in developing empirical methods for analyzing imperfect competition and the organization of markets. We describe the motivation for these developments and some of the successes. We also discuss the relative emphasis that applied work in the field has placed on economic theory relative to statistical research design, and the possibility that a focus on methodological innovation has crowded out applications. We offer some suggestions about how the field may progress in coming years.

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