Can Neoclassical Economics Underpin the Reform of Centrally Planned Economies?

[Symposium: Economic Transition in the Soviet Union and Eastern Europe]

By Peter Murrell

Journal of Economic Perspectives, Fall 1991

This paper addresses whether neoclassical economics can provide the intellectual underpinning for a theory of reform. I examine whether the neoclassical model satisfies an essential condition to qualify for this role: does it give us a satisfactory explan...

Legality and Market Reform in Soviet-Type Economies

[Symposium: Economic Transition in the Soviet Union and Eastern Europe]

By John M. Litwack

Journal of Economic Perspectives, Fall 1991

The classical Soviet-type system operates in the virtual absence of economic legality, which is a prerequisite to a successful transition to a market economy in the Soviet Union and the nations of Eastern Europe. In the absence of economic legality, the l...

Effects of Tax Reform on Labor Supply, Investment, and Saving

[Symposium: Tax Reform Act of 1986]

By Barry Bosworth and Gary Burtless

Journal of Economic Perspectives, Winter 1992

The U.S. tax system received two major overhauls during the 1980s: the tax cuts of 1981 and the Tax Reform Act of 1986. Supporters of both reforms argued that major changes in tax policy could boost saving, investment, labor supply, and entrepreneurship. ...

Corporate Tax Integration: A View from the Treasury Department

By R. Glenn Hubbard

Journal of Economic Perspectives, Winter 1993

"Integration" of the corporate and individual income taxes refers to any plan in which corporate income is taxed only once, rather than taxed both when earned and when distributed to shareholders as dividends. A consensus is emerging from the ongoing stud...

The Salaries of Ph.D.'s in Academe and Elsewhere

By Albert Rees

Journal of Economic Perspectives, Winter 1993

It has long been known that Ph.D.'s working for academic institutions earn less than Ph.D.'s in the same disciplines working for other kinds of employers, especially government and industry. It has not been possible to tell, however, whether this differen...

The Case of the Missing Currency

By Case M. Sprenkle

Journal of Economic Perspectives, Fall 1993

In late 1992, currency in the hands of the public was close to $300 billion, representing nearly 30 percent of M1. One would think that an economic variable of this magnitude would be well-analyzed and well-understood. Quite the contrary. The last serious...

Estimating the Deterrent Effect of Incarceration Using Sentencing Enhancements

By David S. Abrams

American Economic Journal: Applied Economics, October 2012

Increasing criminal sanctions may reduce crime through two primary mechanisms: deterrence and incapacitation. Disentangling their effects is crucial for optimal policy setting. I use sentence enhancements due to the introduction of state add-on gun laws...

The Spending and Debt Response to Minimum Wage Hikes

By Daniel Aaronson, Sumit Agarwal, and Eric French

American Economic Review, December 2012

Immediately following a minimum wage hike, household income rises on average by about $250 per quarter and spending by roughly $700 per quarter for households with minimum wage workers. Most of the spending response is caused by a small number of house...

Diagnosing Consumer Confusion and Sub-optimal Shopping Effort: Theory and Mortgage-Market Evidence

By Susan E. Woodward and Robert E. Hall

American Economic Review, December 2012

Mortgage loans are leading examples of transactions where experts on one side of the market take advantage of consumers' lack of knowledge and experience. We study the compensation that borrowers pay to mortgage brokers for assistance from application to...

Estimating Time Preferences from Convex Budgets

By James Andreoni and Charles Sprenger

American Economic Review, December 2012

Experimentally elicited discount rates are frequently higher than what seems reasonable for economic decision-making. Such high rates are often attributed to present-biased discounting. A well-known bias of standard measurements is the assumption of li...

Married with Children: A Collective Labor Supply Model with Detailed Time Use and Intrahousehold Expenditure Information

By Laurens Cherchye, Bram De Rock, and Frederic Vermeulen

American Economic Review, December 2012

We propose a collective labor supply model with household production that generalizes a model of Blundell, Chiappori, and Meghir (2005). Adults' preferences depend not only on own leisure and individual private consumption of market goods. They also dep...

Who Gets the Job Referral? Evidence from a Social Networks Experiment

By Lori Beaman and Jeremy Magruder

American Economic Review, December 2012

We use recruitment into a laboratory experiment in Kolkata, India to analyze how social networks select individuals for jobs. The experiment allows subjects to refer actual network members for casual jobs as experimental subjects under exogenously varied...

Life Insurance and Household Consumption

By Jay H. Hong and José-Víctor Ríos-Rull

American Economic Review, December 2012

Using life insurance holdings by age, sex, and marital status, we infer how individuals value consumption in different demographic stages. We estimate equivalence scales and bequest motives simultaneously within a fully specified model where agents face U...

Revolving Door Lobbyists

By Jordi Blanes i Vidal, Mirko Draca, and Christian Fons-Rosen

American Economic Review, December 2012

Washington's "revolving door"—the movement from government service into the lobbying industry—is regarded as a major concern for policy-making. We study how ex-government staffers benefit from the personal connections acquired during their pub...

Social Learning with Coarse Inference

By Antonio Guarino and Philippe Jehiel

American Economic Journal: Microeconomics, February 2013

We study social learning by boundedly rational agents. Agents take a decision in sequence, after observing their predecessors and a private signal. They are unable to make perfect inferences from their predecessors' decisions: they only understand the r...

The Demand for Food of Poor Urban Mexican Households: Understanding Policy Impacts Using Structural Models

By Manuela Angelucci and Orazio Attanasio

American Economic Journal: Economic Policy, February 2013

We use Oportunidades, a conditional cash transfer to women, to show that standard demand models do not represent the sample's behavior: Oportunidades increases eligible households' food budget shares, despite food being a necessity; demand for food and...

Targeting with Agents

By Paul Niehaus, Antonia Atanassova, Marianne Bertrand, and Sendhil Mullainathan

American Economic Journal: Economic Policy, February 2013

Targeting assistance to the poor is a central problem in development. We study the problem of designing a proxy means test when the implementing agent is corruptible. Conditioning on more poverty indicators may worsen targeting in this environment beca...

Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity

By Jacob Goldin and Tatiana Homonoff

American Economic Journal: Economic Policy, February 2013

Recent evidence suggests consumers pay less attention to commodity taxes levied at the register than to taxes included in a good's posted price. If this attention gap is larger for high-income consumers than for low-income consumers, policymakers can m...

Are Consumers Myopic? Evidence from New and Used Car Purchases

By Meghan R. Busse, Christopher R. Knittel, and Florian Zettelmeyer

American Economic Review, February 2013

We investigate whether car buyers are myopic about future fuel costs. We estimate the effect of gasoline prices on short-run equilibrium prices of cars of different fuel economies. We then compare the implied changes in willingness-to-pay to the associat...

Making Sense of Nonbinding Retail-Price Recommendations

By Stefan Buehler and Dennis L. Gärtner

American Economic Review, February 2013

We model retail-price recommendations (RPRs) as a communication device in vertical supply relations with private manufacturer information on production costs and consumer demand. With static trade, RPRs are irrelevant, and the equilibrium outcome is inef...