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  3. 2023
  4. Program
  5. Bringing Models to Data in Microeconomics
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Bringing Models to Data in Microeconomics

Paper Session

Friday, Jan. 6, 2023 10:15 AM - 12:15 PM (CST)

New Orleans Marriott, Preservation Hall Studio 8
Hosted By: Korea-America Economic Association
  • Chair: Yunmi Kong, Rice University

How Much Is Being a Primary Dealer Worth? Evidence From Argentinian Treasury Auctions

Jakub Kastl
,
Princeton University
Jesper Rudiger
,
Universidad Carlos III de Madrid

Abstract

We propose a dynamic model of bidding in treasury auctions, in which primary dealers explicitly take into account the possibility of losing their status due to not satisfying the annual minimum winning requirements. As the minimum requirements become more likely to bind, dealers bid more aggressively, sacrificing short-term profits in order to secure their status. Using this trade-off we develop a method for structurally estimating the value of being a primary dealer. To implement the methodology we use data from Argentina from 1996 to 2001, during which period the primary dealer requirements were especially relevant. We find that the direct profits from treasury auctions are minuscule relative to other benefits. We use our framework to illustrate how the minimum winning requirements can be used as a tool to lower the cost of financing the government debt.

Neighborhood Change and the Valuation of Urban Amenities: Incorporating Dynamic Behavior into the Hedonic Model

Alvin D. Murphy
,
Arizona State University

Abstract

TBD

Wage Dynamics and Returns to Unobserved Skill

Lance Lochner
,
University of Western Ontario
Youngmin Park
,
Bank of Canada
Youngki Shin
,
McMaster University

Abstract

Economists disagree about the factors driving the substantial increase in residual wage inequality in the U.S. over the past few decades. We identify and estimate a general model of log wage residuals that incorporates: (i) changing returns to unobserved skills, (ii) a changing distribution of unobserved skills, and (iii) changing volatility in wages due to factors unrelated to skills. Using data from the Panel Study of Income Dynamics, we estimate that the returns to unobserved skills have declined by as much as 50% since the mid-1980s despite a sizable increase in residual inequality. Instead, the variance of skills rose over this period due to increasing variability in life cycle skill growth. Finally, we develop an assignment model of the labor market and show that both demand and supply factors.

Regulating Conglomerates: Evidence from an Energy Conservation Program in China

Qiaoyi Chen
,
Fudan University
Zhao Chen
,
University of Hong Kong
Zhikuo Liu
,
Fudan University
Juan Carlos Suárez Serrato
,
Duke University
Daniel Yi Xu
,
Duke University

Abstract

We study a prominent energy regulation affecting large Chinese manufacturers that are part of broader conglomerates. Using detailed firm-level data and difference-in-differences research designs, we show that regulated firms cut output and shifted some production to unregulated firms in the same conglomerate instead of improving their energy efficiency. To account for conglomerate and market spillovers, we interpret these results through the lens of an industry equilibrium model featuring conglomerate production. We quantify that a$160 social cost of carbon rationalizes the policy and that alternative polices that exploit public information on business networks can increase aggregate energy savings by 10%.

Discussant(s)
Yunmi Kong
,
Rice University
Donghyuk Kim
,
Iowa State University
Terry S. Moon
,
University of British Columbia
Ryan Kim
,
Johns Hopkins University
JEL Classifications
  • L0 - General
  • D0 - General