Escalation of Scrutiny Blundell, Wesley; Gowrisankaran, Gautam; Langer, Ashley
The American economic review,
08/2020, Volume:
110, Issue:
8
Journal Article
Peer reviewed
Open access
The US Environmental Protection Agency (EPA) uses a dynamic approach to enforcing air pollution regulations, with repeat offenders subject to high fines and designation as high priority violators ...(HPV). We estimate the value of dynamic enforcement by developing and estimating a dynamic model of a plant and regulator, where plants decide when to invest in pollution abatement technologies. We use a fixed grid approach to estimate random coefficient specifications. Investment, fines, and HPV designation are costly to most plants. Eliminating dynamic enforcement would raise pollution damages by 164 percent with constant fines or raise fines by 519 percent with constant pollution damages.
Selling Failed Banks GRANJA, JOÃO; MATVOS, GREGOR; SERU, AMIT
The Journal of finance (New York),
August 2017, Volume:
72, Issue:
4
Journal Article
Peer reviewed
The average FDIC loss from selling a failed bank is 28% of assets. We document that failed banks are predominantly sold to bidders within the same county, with similar assets business lines, when ...these bidders are well capitalized. Otherwise, they are acquired by less similar banks located further away. We interpret these facts within a model of auctions with budget constraints, in which poor capitalization of some potential acquirers drives a wedge between their willingness and ability to pay for failed banks. We document that this wedge drives misallocation, and partially explains the FDIC losses from failed bank sales.
We examine how income shocks affect the suicide rate in Indonesia. We use a difference-in-differences approach, exploiting the cash transfer's nationwide rollout, and corroborate the findings using a ...randomized experiment. Our estimates show that the cash transfers reduce the yearly suicide rate by 0.36 per 100,000 people, corresponding to an 18% decrease. Moreover, a different type of income shock, variability in agricultural productivity, also affects the suicide rate. The cash transfer program reduces the causal impact of the agricultural productivity shocks, suggesting an important role for policy interventions. Finally, we provide evidence for depression as a psychological mechanism.
The permanence of land management practices adopted under agri-environmental schemes (AESs) is often questioned. This paper investigates the drivers of farmers' decisions as to whether to maintain ..."proenvironment" practices beyond the duration of a contract, and in particular the effect of social norms. Our results, based on the stated intentions of 395 French farmers, show that both pecuniary and nonpecuniary motivations drive farmers' decisions, which are also significantly influenced by information about a social norm. Therefore "nudging" farmers, by conveying information to them on other farmers' proenvironmental practices, appears to be a means of maintaining the long-run benefits of AESs.
We show that municipalities' financial constraints can have a significant impact on local employment and growth. We identify these effects by exploiting exogenous upgrades in U.S. municipal bond ...ratings caused by Moody's recalibration of its ratings scale in 2010. We find that local governments increase expenditures because their debt capacity expands following a rating upgrade. These expenditures have an estimated local income multiplier of 1.9 and a cost per job of $20,000 per year. Our findings suggest that debt-financed increases in government spending can improve economic conditions during recessions.
This paper studies the effects of peers on the adoption of a Youth Employment Subsidy in Chile since its inception. We examine the effects that former classmates' and coworkers' adoption have on ...one's adoption. Identification comes from discontinuities in the assignment rule that allow us to construct valid instrumental variables for peers' adoption. Using a comprehensive set of administrative records, we find that classmates and especially coworkers play significant roles in the adoption of the subsidy. Peer effects are determined during the early stages of the program's implementation and vary by network characteristics and the strength of network ties.
Macroprudential Policy with Liquidity Panics Garcia-Macia, Daniel; Villacorta, Alonso
Review of financial studies/The Review of financial studies,
05/2023, Volume:
36, Issue:
5
Journal Article
Peer reviewed
Open access
Abstract
We study the optimality of macroprudential policies in an environment where banks provide liquidity to firms. Informational frictions between banks can cause interbank market freezes, ...prompting firms to accumulate their own liquid assets. Liquidity hoarding by firms in turn reduces the demand for bank loans and bank profitability, makes interbank market freezes even more likely, and may ultimately trigger a self-fulfilling bad equilibrium. Such “liquidity panics” provide an additional rationale for liquidity requirements on banks, which alleviate frictions in the banking sector and, paradoxically, can increase aggregate investment. Instead, policies encouraging bank lending can have the opposite effect.
Can tax regimes shape the incentives to engage in armed conflict? Indian mining royalties benefit the states but are set by the central government. India's Maoist belt is mineral rich, and states are ...responsible for counterinsurgency operations. We exploit the introduction of a 10% ad valorem tax on iron ore that increased royalty collections of the affected states by a factor of 10. We find that the royalty hike was followed by a significant intensification of violence in districts with important iron ore deposits. The royalty increase was also followed by an increase in illegal mining activity in iron mines.
This paper assesses the contribution of livestock to reducing rural poverty and examines the determinants of livestock assets with panel data from Vietnam. The findings show that livestock production ...contributes to reducing poverty and livestock assets are influenced by the number of shocks that households faced during the last three years, access to credits, farmland size, education of household head, irrigation system, and access to the national electricity. We suggest that empowering rural households to better cope with shocks contributes to developing livestock and consequently to reducing rural poverty.
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