The entire working paper series is on RePEc. Faculty members and graduate students who want to add their working papers can contact Mike Perry, Coordinator, Reserach Grants and Projects.
Fernando M. Aragón, Francisco Oteiza, Juan Pablo Rud
This paper examines how farmers adapt, in the short-run, to extreme heat. Using a production function approach and micro-data from Peruvian households, we find that high temperatures induce farmers to increase the use of inputs, such as land and domestic labor. This reaction partially attenuates the negative effects of high temperatures on output. We interpret this change in inputs as an adaptive response in a context of subsistence farming, incomplete markets, and lack of other coping mechanisms. We use our estimates to simulate alternative climate change scenarios and show that accounting for adaptive responses is quantitatively important.
Gordon M. Myers
A Faculty chooses a level of costly effort in generating revenue for the university. The revenue is deployed in the pursuit of academic excellence in research and teaching. The effort is not observable by the central Administration and the amount of revenue generated from given level of effort is uncertain. The Administration and Faculties are assumed risk averse. I show that when effort is observable, or there is no uncertainty, or the Faculty is not risk averse, pure Responsibility Center Budgeting (RCB) is efficient and optimal from the perspective of the Administration. The intuition for this is provided by pure RCB solving the incentive problem and leading to the right effort level by making the Faculty the residual claimant. Once the Faculty is risk averse I show partial RCB is optimal. A problem with pure RCB is that the Faculty holds all the revenue risk. Partial RCB then provides a balance between providing the right incentives to the Faculty and the Administration providing partial insurance to the Faculty. In my simple model I show that we move further away from pure RCB, the more uncertain the environment, the more risk averse the Faculty, and the less risk averse the Administration.
Mahsa Akbari, Duman Bahrami-Rad, & Erik O. Kimbrough
By shaping patterns of relatedness and interaction, marriage practices influence the relative returns to norms of nepotism/favoritism versus norms of impartial cooperation. In-marriage (e.g. consanguineous marriage) yields a relatively closed society of related individuals and thereby encourages favoritism and corruption. Out-marriage creates a relatively open society with increased interaction between non-relatives and strangers, thereby encouraging impartiality. We report a robust association between in-marriage practices and corruption across countries and across Italian provinces. A stylized corruption experiment comparing subjects from two countries with divergent marriage patterns provides complementary evidence that the degree of impartiality varies with marriage patterns.
Athanasios Geromichalos & Lucas Herrenbrueck
We propose a new model of liquidity in the macroeconomy. It is simple and tractable, yet takes the foundations of liquidity seriously, and can thus be precise about the implementation, effects, and optimality of monetary policy. The model shines light on some open issues in macroeconomics: the effect of asset purchases, the tension between two channels through which the price of liquidity affects the economy (Friedman’s real balance effect vs Mundell’s and Tobin’s asset substitution effect), the liquidity trap, and the importance of using the right interest rate for empirical analysis.