How Punishment Severity Affects Jury Verdicts: Evidence from Two Natural Experiments

By Anna Bindler and Randi Hjalmarsson

American Economic Journal: Economic Policy, November 2018

This paper studies the effect of punishment severity on jury decision-making using archival data from London's Old Bailey Criminal Court from 1772 to 1871. We exploit two natural experiments in English history, resulting in sharp decreases in punishment s...

From Selling Goods to Selling Services: Firm Responses to Trade Liberalization

By Holger Breinlich, Anson Soderbery, and Greg C. Wright

American Economic Journal: Economic Policy, November 2018

In this paper we focus on a new channel of adaptation to trade liberalization, namely the shift toward increased provision of services in lieu of goods production. We exploit variation in European Union trade policy to show that lower manufacturing tariff...

Discounting Disentangled

By Moritz A. Drupp, Mark C. Freeman, Ben Groom, and Frikk Nesje

American Economic Journal: Economic Policy, November 2018

The economic values of investing in long-term public projects are highly sensitive to the social discount rate (SDR). We surveyed over 200 experts to disentangle disagreement on the risk-free SDR into its component parts, including pure time preference, t...

Fleeing a Lame Duck: Policy Uncertainty and Manufacturing Investment in US States

By Nathan Falk and Cameron A. Shelton

American Economic Journal: Economic Policy, November 2018

It is found that electorally-induced policy uncertainty decreases manufacturing investment in US states. In a state with average partisan polarization, the elasticity of election-year investment to a specific measure of policy uncertainty is -0.027. When ...

The Decline, Rebound, and Further Rise in SNAP Enrollment: Disentangling Business Cycle Fluctuations and Policy Changes

By Peter Ganong and Jeffrey B. Liebman

American Economic Journal: Economic Policy, November 2018

One-in-seven Americans received benefits from the Supplemental Nutrition Assistance Program in 2011, an all-time high. We analyze changes in program enrollment over the past two decades, quantifying the contributions of unemployment and state policy chang...

Can Small Incentives Have Large Effects? The Impact of Taxes versus Bonuses on Disposable Bag Use

By Tatiana A. Homonoff

American Economic Journal: Economic Policy, November 2018

This paper examines a simple element of financial incentive design—whether the incentive takes the form of a fee for bad behavior or a reward for good behavior—to determine if the framing of the incentive influences the policy's effectiveness. I inves...

The Welfare Impact of Second-Best Uniform-Pigouvian Taxation: Evidence from Transportation

By Christopher R. Knittel and Ryan Sandler

American Economic Journal: Economic Policy, November 2018

When consumers or firms don't face the true social cost of their actions, market outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure, but it may be infeasible to tax the externality d...

A Dynamic Model of Housing Supply

By Alvin Murphy

American Economic Journal: Economic Policy, November 2018

This paper estimates a dynamic microeconometric model of housing supply. The model features forward-looking landowners who optimally choose both the timing and the nature of construction while taking into account expectations about future prices and costs...

Taxes and US Oil Production: Evidence from California and the Windfall Profit Tax

By Nirupama L. Rao

American Economic Journal: Economic Policy, November 2018

The recent boom in U.S. oil production has prompted debates on levying new taxes on oil. This paper uses new well-level production data and price variation from federal oil taxes and price controls to assess how taxes affected production. After-tax price ...

How Initial Conditions Can Have Permanent Effects: The Case of the Affordable Care Act

By Florian Scheuer and Kent Smetters

American Economic Journal: Economic Policy, November 2018

We document that states that experienced website glitches in the ACA's first year faced higher average costs that persisted into future years. These dynamics are inconsistent with the standard strategic-pricing model, which requires non-localized common k...

The Persistent Effects of Place-Based Policy: Evidence from the West-German Zonenrandgebiet

By Maximilian v. Ehrlich and Tobias Seidel

American Economic Journal: Economic Policy, November 2018

Using a natural experiment, we show that temporary place-based subsidies generate persistent effects on economic density. The spatial regression discontinuity design controls for continuous local agglomeration externalities, so we attribute an important r...

Front Matter

Journal of Economic Perspectives, Fall 2018

An Economist's Guide to Climate Change Science

[Symposium: Climate Change]

By Solomon Hsiang and Robert E. Kopp

Journal of Economic Perspectives, Fall 2018

This article provides a brief introduction to the physical science of climate change, aimed towards economists. We begin by describing the physics that controls global climate, how scientists measure and model the climate system, and the magnitude of huma...

Quantifying Economic Damages from Climate Change

[Symposium: Climate Change]

By Maximilian Auffhammer

Journal of Economic Perspectives, Fall 2018

Climate scientists have spent billions of dollars and eons of supercomputer time studying how increased concentrations of greenhouse gases and changes in the reflectivity of the earth's surface affect dimensions of the climate system relevant to human soc...

The Cost of Reducing Greenhouse Gas Emissions

[Symposium: Climate Change]

By Kenneth Gillingham and James H. Stock

Journal of Economic Perspectives, Fall 2018

Most countries, including the United States, have an array of greenhouse gas mitigation policies, which provide subsidies or restrictions typically aimed at specific technologies or sectors. Such climate policies range from automobile fuel economy stand...

Is This Tax Reform, or Just Confusion?

[Symposium: The Tax Cuts and Jobs Act]

By Joel Slemrod

Journal of Economic Perspectives, Fall 2018

Based on the experience of recent decades, the United States apparently musters the political will to change its tax system comprehensively about every 30 years, so it seems especially important to get it right when the chance arises. Based on the strong ...

Measuring the Effects of Corporate Tax Cuts

[Symposium: The Tax Cuts and Jobs Act]

By Alan J. Auerbach

Journal of Economic Perspectives, Fall 2018

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA), the most sweeping revision of US tax law since the Tax Reform Act of 1986. The law introduced many significant changes. However, perhaps none was as important as the c...

Outside the Box: Unconventional Monetary Policy in the Great Recession and Beyond

[Symposium: Unconventional Monetary Policy]

By Kenneth N. Kuttner

Journal of Economic Perspectives, Fall 2018

In November 2008, the Federal Reserve faced a deteriorating economy and a financial crisis. The federal funds rate had already been reduced to virtually zero. Thus, the Federal Reserve turned to unconventional monetary policies. Through "quantitative easi...

Unconventional Monetary Policies in the Euro Area, Japan, and the United Kingdom

[Symposium: Unconventional Monetary Policy]

By Giovanni Dell'Ariccia, Pau Rabanal, and Damiano Sandri

Journal of Economic Perspectives, Fall 2018

The global financial crisis hit hard in the euro area, the United Kingdom, and Japan. Real GDP from peak to trough contracted by about 6 percent in the euro area and the United Kingdom and by 9 percent in Japan. In all three cases, central banks cut int...

Ending Global Poverty: Why Money Isn't Enough

[Symposium: Development and State Capacity]

By Lucy Page and Rohini Pande

Journal of Economic Perspectives, Fall 2018

Between 1981 and 2013, the share of the global population living in extreme poverty fell by 34 percentage points. This paper argues that such rapid reductions will become increasingly hard to achieve for two reasons. First, the majority of the poor now ...