The Effect of School Construction on Test Scores, School Enrollment, and Home Prices

This paper provides new evidence on the effect of school construction projects on home prices, academic achievement, and public school enrollment. Taking advantage of the staggered implementation of a comprehensive school construction project in a poor urban district, we find that, by six years after building occupancy, $10,000 of per-student investment in school construction raised reading scores for elementary and middle school students by 0.027 standard deviations. For a student receiving the average treatment intensity this corresponds to a 0.21 standard deviation increase. School construction also raised home prices and public school enrollment in zoned neighborhoods.school construction, test scores, home prices

Chile’s Fiscal Rule as Social Insurance

We explore the role of fiscal policy over the business cycle from a normative perspective, for a government with a highly volatile and exogenous revenue source. Instead of resorting to Keynesian mechanisms, in our framework fiscal policy plays a role because the government provides transfers to heterogeneous households facing volatile income, albeit with an imperfect transfer technology (a fraction of transfers leak to richer households). We calibrate the model to Chile’s highly volatile government revenues derived from copper, and characterize the optimal fiscal reaction. We quantify the welfare gains vis-à-vis a balanced budget rule, and the degree of adequate fiscal countercyclicality. We also analyze simpler rules, such as the structural balance rule in place in Chile during the last decade, more general linear rules, and linear rules with an escape clause. We find that the optimal rule leads to the same welfare gain as doubling the government’s copper revenues under a balanced budget rule. Chile’s structural balance rule achieves 18% of these gains, while a linear rule with an escape clause achieves 83% of the gains. The degrees of countercyclicality of the optimal rule and the linear rule with an escape clause are similar, and much larger than those of the structural balance rule.

Another Pass-Through Bites the Dust? Oil Prices and Inflation

This paper presents evidence of an important decline during recent decades in the pass-through from the price of oil to the general price level. We find that this decline is a generalized fact for a large set of countries. After documenting correlations between the consumer price index and oil prices, we use two estimation strategies in an attempt to properly identify the effect of oil shocks on inflation. First, we estimate the traditional Phillips curve augmented to include oil and test for structural breaks in 34 countries. This methodology shows a fall in the average estimated passthrough for industrial economies and, to a lesser degree, for emerging economies. Second, we estimate rolling vector autoregressions for a subsample of countries for which we have sufficient data. We derive impulse response functions of inflation to oil shocks and interpret the integrals as estimates of pass-through. We find that the effect of oil shocks on inflation has weakened for most of the 12 countries in the sample. Among the factors that might help to explain this decline, we argue that the most important are a reduction in the oil intensity of economies around the world, a reduction in the exchange rate pass-through, a more favorable inflation environment, and the fact that the current oil price shock is largely the result of strong world demand. These factors help to explain not only why the current shock has had limited inflationary effects, but also why it has had limited consequences for output.

Financial Diversification, Sudden Stops and Sudden Starts

The recent literature on sudden stops is based on the fact that many emerging market economies experience recurrent and sharp capital account reversals. In this paper we argue, as some recent research has started to emphasize, that more information can be obtained by looking at gross rather than net flows. Economies may be curtailed from international financial markets, resulting in a sudden stop of inflows, but others may be experiencing portfolio shifts that cause sudden start of capital outflows. By looking at gross flows, and comparing emerging markets (EMEs) with developed economies (DEs) we indeed show that there is a variety of experiences that cannot be lumped together. In particular, sudden stop of inflows are as common in DEs as in EMEs, but a key difference is that in the former outflows and inflows are negatively correlated, which dampen the reversal of net flows. We present a model of financial diversification to interpret these results which is consistent with most evidence we report here. l II) could be helpful on this task.

Fine Scale Circulation Near Foxtrot in Hampton Roads, Virginia

During 1974 the Virginia Institute of Marine Science conducted a series of oceanographic, water quality and modeling studies for the outfall from the proposed Nansemond Wastewater Treatment Plant (VIMS, 1975). One of these studies included dye releases to determine the dispersion and transport of material discharged to Hampton Roads near Pig Point. These dye releases were made from the munitions loading piers known as Foxtrot . The proposed outfall, as given in the Facilities Plan is located roughly one kilometer to the east-south-east of Foxtrot. Tidal circulation in Hampton Roads is quite complex and there was concern that the distribution patterns for material released at the two sites would differ appreciably. Therefore a fine scale circulation study was conducted in the vicinity of Foxtrot

The evolving impacts of COVID-19 on small businesses since the CARES Act

This note provides new evidence on how small business owners have been impacted by COVID-19, and how these effects have evolved since the passage of the CARES Act. As part of a broader and ongoing project, we collected survey data from more than 8,000 small business owners in the U.S. from March 28th, one day after the CARES Act was passed, through April 20th. The data include information on firm size, layoffs, beliefs about the future prospects of their businesses, as well as awareness of existing government relief programs. We provide three main findings. First, by the time the CARES Act was passed, surveyed small business owners were already severely impacted by COVID-19-related disruptions: 60% had already laid off at least one worker. Second, business owners’ expectations about the future are negative and have deteriorated throughout our study period, with 37% of respondents in the first week reporting that they did not expect to recover within 2 years, growing to 46% by the last week. Third, the smallest businesses had the least awareness of government assistance programs, the slowest growth in awareness after the passage of the CARES Act, and never caught up with larger businesses. The last finding indicates that small businesses may have missed out on initial Paycheck Protection Program funds because of low baseline awareness and differential access to information relative to larger firms

Responding to Regulatory Uncertainty: Evidence from Basel III

This paper examines how firms respond to proposed regulation. Specifically, we utilize the time period over which banking authorities discussed, adopted, and implemented Basel III to examine how banks responded to the proposed regulatory framework. We find that banks were not only quick to lobby rule makers against the proposal, but that they also simultaneously altered their business models and made strategic financial reporting changes in response to it. We also provide evidence that banks were more likely to make these anticipatory changes when they: 1) benefitted more from signaling an early commitment, or 2) had less uncertainty about whether they would be subjected to the regulation. Taken together, our findings indicate that firms’ incentives lead them to simultaneously respond through multiple channels when faced with regulatory uncertainty.http://deepblue.lib.umich.edu/bitstream/2027.42/110908/1/1213_Hendricks_Apr2015.pdfhttp://deepblue.lib.umich.edu/bitstream/2027.42/110908/4/1213_Shakespeare_March2016.pdfhttp://deepblue.lib.umich.edu/bitstream/2027.42/110908/6/1213_Shakespeare_March2016.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/110908/7/1213_Hendricks_Nov2016.pdfDescription of 1213_Shakespeare_March2016.pdf : Fixed March 2016 revisionDescription of 1213_Shakespeare_March2016.pdf : March 2016 revisionDescription of 1213_Hendricks_Nov2016.pdf : November 2016 revisio

Financial Diversification and Sudden Stops

Recent literature on sudden stops analyses the sharp and varied capital account reversals experienced by many emerging market economies. This paper claims that more information can be extracted from the behavior of gross capital flows than from their net results. It emphasizes the fact that, while one economy’s sudden stop can reveal exclusion from the international financial markets, another can be making adjustments to its investment portfolio causing a sudden start, and both produce the same net effect on the capital account. We present a simple model that rationalizes this empirical fact and its relationship with the economy’s financial diversification.