Measuring the Macroeconomic Impact of Carbon Taxes

By Gilbert E. Metcalf and James H. Stock

AEA Papers and Proceedings, May 2020

Policymakers often express concern about the impact of carbon taxes on employment or GDP. Using a new dataset on carbon tax rates, we estimate the macroeconomic impacts of these taxes on GDP and employment growth rates for various specifications and sampl...

The Fiscal Costs of Climate Change

By Lint Barrage

AEA Papers and Proceedings, May 2020

This paper explores the fiscal consequences of climate change. The analysis considers climate change impacts on (i) the cost of existing government services (e.g., disaster assistance) and (ii) the need for publicly provided anticipatory adaptation (e.g.,...

The Cost-Effectiveness Implications of Carbon Price Certainty

By Joseph E. Aldy and Sarah Armitage

AEA Papers and Proceedings, May 2020

While a firm knows the carbon price with certainty under a tax, it must form an expectation about future allowance prices to identify its cost-effective abatement investment under a cap-and-trade program. We illustrate graphically how errors in forming th...

Effects of Fiscal Policy on Credit Markets

By Alan J. Auerbach, Yuriy Gorodnichenko, and Daniel Murphy

AEA Papers and Proceedings, May 2020

Credit markets typically freeze in recessions: access to credit declines, and the cost of credit increases. A conventional policy response is to rely on monetary tools to saturate financial markets with liquidity. Given limited space for monetary policy i...

Automatic Stabilizers in a Low-Rate Environment

By Olivier J. Blanchard and Lawrence H. Summers

AEA Papers and Proceedings, May 2020

In a world where monetary policy cannot assume responsibility for stabilization policy, there is a strong need for fiscal policy to address stabilization issues. In this context, we argue for "semi-automatic stabilizers," aimed at reducing unemployment sl...

National Fiscal Policies to Fight Recessions in US States

By Karen Dynan and Douglas Elmendorf

AEA Papers and Proceedings, May 2020

Countercyclical fiscal policy generally focuses on national economic downturns. But US states experience significantly different patterns of unemployment, and demand shocks appear to drive much of that variation. State budget rules limit the ability of st...

Public Debt, Interest Rates, and Negative Shocks

By Richard W. Evans

AEA Papers and Proceedings, May 2020

Debt-to-GDP ratios across developed economies are at historically high levels, and government borrowing rates remain persistently low. Blanchard (2019) provides evidence that the fiscal costs and welfare costs are low of increased government debt in low i...

A Skeptic's Guide to Modern Monetary Theory

By N. Gregory Mankiw

AEA Papers and Proceedings, May 2020

This essay discusses a new approach to macroeconomics called modern monetary theory (MMT). It identifies the key differences between MMT and the approach found in mainstream textbooks. It concludes that while MMT contains some kernels of truth, its most n...

Are Large Deficits and Debt Dangerous?

By Michael J. Boskin

AEA Papers and Proceedings, May 2020

The traditional view of large deficits and debt is that they are harmful, save in recession/early recovery, for tax smoothing or to fund productive public investment, as they crowd out private investment and lower future income, and taken to extremes, can...

Simulating the Blanchard Conjecture in a Multiperiod Life Cycle Model

By Jasmina Hasanhodzic

AEA Papers and Proceedings, May 2020

In recent writings, Olivier Blanchard has suggested that when the safe rate on government debt is less that the economy's growth rate, additional deficit-financed US federal spending would come at no cost to any future generation and benefits to some. Thi...

Leveraging Posterity's Prosperity?

By Johannes Brumm, Laurence Kotlikoff, and Felix Kubler

AEA Papers and Proceedings, May 2020

We critically review studies by Blanchard (B) and Rachel and Summers (RS). By the standard fiscal-gap measure, the US government is in dire fiscal shape thanks to constantly enlarging its postwar, take-as-you-go Ponzi scheme. Yet B and RS seemingly ration...

Is New Platform Work Different from Other Freelancing?

By Andrew Garin, Emilie Jackson, Dmitri K. Koustas, and Carl McPherson

AEA Papers and Proceedings, May 2020

The rise of freelance work in the online platform economy (OPE) has received considerable media and policy attention in recent years, but freelance work is by no means a new phenomenon. In this paper, we draw on IRS tax records to identify instances when ...

Information Reporting and Tax Compliance

By Bibek Adhikari, James Alm, and Timothy F. Harris

AEA Papers and Proceedings, May 2020

Ensuring tax compliance is an enduring problem for governments in all countries. In this paper, we examine the role of information reporting in increasing tax compliance. We first discuss the practice of information reporting in the US, including a recent...

The Distinctive Values of Bankers

By Nava Ashraf, Oriana Bandiera, and Alexia Delfino

AEA Papers and Proceedings, May 2020

The banking sector is sometimes characterized by dysfunctional culture, but little is known about what values bankers hold. We gather data on employee values in a large multinational bank and measure alignment within the bank and with broader society. We ...

Visible Hands: Governance of Value Creation—Within Firms and Beyond

By Robert Gibbons

AEA Papers and Proceedings, May 2020

Economic transactions can be divided into (1) those that are priced versus (2) those that are governed by visible hands, and within the latter (2a) those within a single organization versus (2b) those in nonintegrated settings. Nonintegration is not alway...

Tackling Climate Change Requires Organizational Purpose

By Rebecca Henderson and George Serafeim

AEA Papers and Proceedings, May 2020

The public debate about how to tackle climate change has been overwhelmingly dominated by the assumption that it can be solved through the adoption of an appropriate pricing regime. This paper argues that while the development of such a regime will be cri...

Measuring Collaboration in Modern Organizations

By Stephen Michael Impink, Andrea Prat, and Raffaella Sadun

AEA Papers and Proceedings, May 2020

Internal communication has been a central theme in organizational economics, as employee collaboration provides insight into the structure of firms. Use of electronic communications data can be transformational for organizational economics, as these data ...

Knowledge, Stories, and Culture in Organizations

By Robert Gibbons and Laurence Prusak

AEA Papers and Proceedings, May 2020

Organizations are full of stories; organizational economics, not so much. Rather, organizational economics has little work that conceptualizes the role or measures the incidence of stories in organizations. This shortage concerns us not only because stori...

Individual Identity and Organizational Identification: Evidence from a Field Experiment

By Maria Guadalupe, Zoe Kinias, and Florian Schloderer

AEA Papers and Proceedings, May 2020

This paper explores the relationship between individual identity and organizational attachment. Using individual data from employees at a large employer in the services sector, we show that making individual values salient (through a value affirmation) on...

Stories at Work

By Robert Akerlof, Niko Matouschek, and Luis Rayo

AEA Papers and Proceedings, May 2020

Organizational stories are commonplace and a crucial force shaping employee behavior. We show how an organization's choice of story can be formally incorporated into its design problem. In our simple model, the organization optimally becomes either "purpo...