Department of Economics

Safe asset shortages can expose an economy to liquidity traps. The nature of these traps is determined by the cyclicality of the bond premium. A counter-cyclical bond premium opens the possibility of expectations-driven liquidity traps in which small issuances of government debt crowd out private debt and reduce output. In contrast, when the bond premium is pro-cyclical and the economy is in a liquidity trap, government debt is expansionary. In the data, we find evidence of a counter-cyclical bond premium. Large interventions can prevent the emergence of self-fulfilling traps, but they require sufficient fiscal capacity. In a quantitative model calibrated to the Great Recession, a promise to increase the government debt-to-GDP ratio by 20 percentage points precludes the possibility of self-fulfilling traps.

Do exchange rate movements matter for how markets price foreign currency denominated sovereign bonds? High-frequency bond price data from 1931 show that depreciation against the dollar/gold was associated with elevated risk premia on US dollar/gold public debt. We use a theoretical model to illustrate how foreign currency debt influences exchange rate policy and foreign currency bond prices. We use these theoretical results, the timing of sterling's devaluation in September 1931, and historically determined fundamentals to identify the impact of exchange rate policy on hard-currency bond yields in the Great Depression.

Using data on the NBER working paper series, we show that the dissemination of economics research suffers from a congestion problem: An increase in the number of weekly released working papers on average reduces downloads, abstract views, and media attention for each paper. Subsequent publishing and citation outcomes are harmed as well. Papers written by prominent authors are not immune to this congestion effect. Finally, suggestive evidence on viewership and downloads implies that working papers substitute for the dissemination function of publication. Our results highlight how readers face time and cognitive constraints, with increased congestion in working papers leading to real impacts on how research is consumed.

Emigration of young, highly educated individuals may deprive origin countries of entrepreneurs. We identify exogenous variation in emigration from Italy by interacting past diaspora networks and current economic pull factors in destination countries. We find that a 1 standard deviation increase in the emigration rate generates a 4.8 percent decline in firms’ creation in the local labor market of origin. An accounting exercise decomposes the estimated effect into four components: subtraction of individuals with average entrepreneurial propensity, selection of young and college-educated among emigrants, negative spillovers on firm creation, and selection on unobservable characteristics positively associated with entrepreneurship.

The emergence of COVID-19 spurred the fastest development of a vaccine in history. Yet, a large proportion of Americans remain hesitant to receive it. Our paper investigates how the social networks we inhabit might explain persistent vaccine hesitancy. We argue that the COVID-19 vaccination status of respondents closest associates inhibits or motivates their decision to receive a COVID-19 vaccine. To test our argument, we conduct an original survey asking respondents a battery of questions about the people with whom individuals most frequently discuss vaccines and COVID-19. Our survey reports that individuals discussion networks are polarized by vaccination status. Concurrently, there is a strong association between the social networks vaccination status and the respondents vaccination status. This association is so robust that partisanship does not moderate the association between discussants vaccination status and respondents vaccination status. Together, our results imply that unvaccinated individuals remain hesitant because they face reinforcing social pressure from their closest associates. The unique timing of our survey, during an unprecedented vaccination campaign against a novel disease, offers a snapshot of how relationships may affect attitudes.

We examine multi-generational impacts of positive in utero health interventions using a new research design that exploits sharp increases in prenatal Medicaid eligibility that occurred in some states. Our analyses are based on U.S. Vital Statistics Natality files, which enables linkages between individuals' early life Medicaid exposure and the next generation's health at birth. We find evidence that the health benefits associated with treated generations' early life program exposure extend to later offspring. Our results suggest that the returns on early life health investments may be substantively underestimated.