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Working Paper Archives

Federal Reserve Bank of St. Louis working papers are preliminary materials circulated to stimulate discussion and critial comment.

Applied Microeconomics

Informal Unemployment Insurance and Labor Market Dynamics

How do job losers use default -- a phenomenon 6x more prevalent than bankruptcy --as a type of “informal" unemployment insurance, and more importantly, what are the social costs and benefits of this behavior?

What Do We Know about the Relationship between Access to Finance and International Trade?

The recent financial crisis has focused attention on the relationship between access to finance and international trade, triggering a burgeoning segment of the literature evaluating this link empirically.

International Trade, Female Labor, and Entrepreneurship in MENA Countries

Middle Eastern and North African (MENA) countries stand out in international comparisons of de jure obstacles to female employment and entrepreneurship. These obstacles manifest themselves in low rates of female labor participation, entrepreneurship, and ownership.

Interjurisdictional Competition with Adverse Selection

In this paper, we study the welfare consequences of imposing alternative regimes of competition between two local governments that compete for mobile firms which have private information on their degree of mobility.

On the Substitutability between Foreign Aid and International Credit

We examine the effect of relaxing a binding borrowing constraint for a recipient country on theamount of foreign aid it receives.

The Case Against Patents

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity.

An Approximate Dual-Self Model and Paradoxes of Choice under Risk

We derive a simplified version of the model of Fudenberg and Levine [2006, 2011] and show how this approximate model is useful in explaining choice under risk.

Evolving to the Impatience Trap: The Example of the Farmer-Sheriff Game

The literature on the evolution of impatience, focusing on one-person decision problems, finds that evolutionary forces favor the more patient individuals. This paper shows that in the context of a game, this is not necessarily the case.

Codes of Conduct, Private Information, and Repeated Games

We examine self-referential games in which there is a chance of understanding an opponent’s intentions. Our main focus is on the interaction of two sources of information about opponents’ play: direct observation of the opponent’s code-of-conduct, and indirect observation of the opponent’s play in a repeated setting.

Academic Rankings with RePEc

This document describes the data collection and use of data for the computation of rankings within RePEc (Research Papers in Economics).

Author Identification in Economics, ... and Beyond

Identifying authorship correctly and efficiently is a difficult problem when the literature is abundant, but poorly recorded. Homonyms are tedious to differentiate.

Did Affordable Housing Legislation Contribute to the Subprime Securities Boom?

We use a regression discontinuity approach and present new institutional evidence to investigate whether affordable housing policies influenced the market for securitized subprime mortgages.

Lifetime Labor Supply and Human Capital Investment

We develop a model of retirement and human capital investment to study the effects of tax and retirement policies.

Credit Scoring and Loan Default

This paper introduces a measure of credit score performance that abstracts from the influence of "situational factors." Using this measure, we study the role and effectiveness of credit scoring that underlied subprime securities during the mortgage boom of 2000-2006.

What do happiness and health satisfaction data tell us about relative risk aversion?

In this paper we provide estimates of the coefficient of relative risk aversion using information on self-reports of subjective personal well-being from multiple datasets.

The Effect of Neighborhood Spillovers on Mortgage Selection

In this paper we analyze how spillovers in mortgage adoption affect mortgage product choice across neighborhoods and across borrowers of different racial or ethnic groups.

The Effects of Female Labor Force Participation on Obesity

This paper assesses whether a causal relationship exists between recent increases in female labor force participation and the increased prevalence of obesity amongst women.

Differences in Subprime Loan Pricing Across Races and Neighborhoods

We investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion

Why Do Education Vouchers Fail at the Ballot Box?

We compare a uniform voucher regime against the status quo mix of public and private education, focusing on the distribution of welfare gains and losses across house- holds by income.

Moral Hazard and Lack of Commitment in Dynamic Economies

We revisit the role of limited commitment in a dynamic risk-sharing setting with private information. We show that a Markov-perfect equilibrium, in which agent and insurer cannot commit beyond the current period, and an infinitely-long contract to which only the insurer can commit, implement identical consumption, effort and welfare outcomes.

Dynamic Optimal Insurance and Lack of Commitment

We analyze dynamic risk-sharing contracts between profit-maximizing insurers and risk-averse agents who face idiosyncratic income uncertainty and can self-insure through savings.

Should Easier Access to International Credit Replace Foreign Aid?

We examine the interaction between foreign aid and binding borrowing constraint for a recipient country. We also analyze how these two instruments affect economic growth via non-linear relationships. First of all, we develop a two-country, two-period trade-theoretic model to develop testable hypotheses and then we use dynamic panel analysis to test those hypotheses empirically. Our main findings are that: (i) better access to international credit for a recipient country reduces the amount of foreign aid it receives, and (ii) there is a critical level of international financial transfer, and the marginal effect of foreign aid is larger than that of loans if and only if the transfer (loans or foreign aid) is below this critical level.

Out-of-School Suspensions and Parental Involvement in Children’s Education

Do parents alter their investment in their child’s human capital in response to changes in school inputs? If they do, then ignoring this effect will bias the estimates of school and parental inputs in educational production functions.

Optimal Auditing and Insurance in a Dynamic Model of Tax Compliance

We study the optimal auditing of a taxpayer’s income in a dynamic principal- agent model of hidden income. Taxpayers in our model initially have low income and stochastically transit to high income that is an absorbing state.

Immigration Policy and Counterterrorism

A terrorist group, based in a developing (host) country, draws unskilled and skilled labor from the productive sector to conduct attacks in that nation and abroad.

The Distributional Burden of Instant Lottery Ticket Expenditures: An Analysis by Price Point

This article examines the distributional burden of different price-point instant lottery games. Theoretical reasons exist for expecting higher-priced instant lottery games to be less regressive than lower-priced instant games.

Foreign Direct Investment, Aid, and Terrorism

Using a dynamic panel data framework, we investigate the relationship between the two major forms of terrorism and foreign direct investment (FDI). We then analyze how these relationships are affected by foreign aid flows.

The Role of Schools in the Production of Achievement

What explains differences in pre-market factors? Three types of inputs are believed to determine the skills agents take to the labor market: ability, family inputs, and school inputs.

International Oligopoly, Barriers to Outsourcing and Domestic Employment

Barriers to outsourcing that are being currently implemented in the US effectively tax its companies who “export” jobs through outsourcing. The objective is to raise domestic employment.

Crime and Arrests: Deterrence or Resource Reallocation?

We use monthly time-series data for 20 large U.S. cities to test the deterrence hypothesis (arrests reduce crimes) and the resource reallocation hypothesis (arrests follow from an increase in crime).

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