The Local Aggregate Effects of Minimum Wage Increases

Using variation in minimum wages across cities and controlling for differences in business-cycle factors and long-run local economic trends, we find that following minimum wage increases, both, prices and nominal spending rise modestly. These gains are larger for certain subcategories of goods such as food away from home and in locations where low-wage workers account for a larger share of employment. Further, minimum wage increases are associated with reduced total debt among households with low credit scores, higher auto debt, and increased access to credit.     

The Cyclical Effects of Incremental Export Subsidies*

The Crawford Committee on structural adjustment in Australia recommended a subsidy to be paid on the excess of manufacturing export revenues over the average of some number of previous years. Schemes, of this nature have been used in New Zealand. Pakistan, Singapore and elsewhere, and may produce a regular cycle in exports and in domestic prices and quantities. A subsidy-induced cycle is unlikely to be avoided in most Australian manufacturing export industries, except under conditions of rapid inflation or productivity -growth. The cyclical pattern can be avoided, at some cost to the Treasury, by setting the subsidy base at some fraction of actual past performance.     

Managerial Ability, Compensation, and the Closed-End Fund Discount

This paper shows that the existence of managerial ability, combined with the labor contract prevalent in the industry, implies that the closed‐end fund discount should exhibit many of the primary features documented in the literature. We evaluate the model's ability to match the quantitative features of the data, and find that it does well, although there is some observed behavior that remains to be explained.     

ENERGY-EFFICIENT LIGHTING: MARKET DATA, MARKET IMPERFECTIONS, AND POLICY SUCCESS

Many economists question engineering-economic studies aimed at demonstrating anomalously slow diffusion of energy-efficient technology and the benefits of regulations to promote such technology. One argument against such studies is that standard techniques of engineering economics are either inappropriate or are routinely misapplied in assessing the performance of the market for energy efficiency. This paper takes account of such critiques in presenting engineering-economic evidence on the diffusion of energy efficiency improvements. It examines the engineering and economic characteristics of standard and energy-efficient magnetic ballasts for fluorescent lighting. Efficient magnetic ballasts represent an excellent investment for 99 percent of the commercial building floor stock and a moderately good investment for 0.7 percent of the commercial floor stock. Still, in the 1980s these ballasts were being adopted only at a rate commensurate with the enactment of appliance efficiency standards in various states. In this case, solid empirical evidence supports skepticism about the effectiveness of the market mechanism in promoting cost-effective energy efficiency improvements and about the benefits of regulation to counteract this shortcoming.     

Information Cascades: Evidence from a Field Experiment with Financial Market Professionals

Previous empirical studies of information cascades use either naturally occurring data or laboratory experiments. We combine attractive elements from each of these lines of research by observing market professionals from the Chicago Board of Trade (CBOT) in a controlled environment. Analysis of over 1,500 individual decisions suggests that CBOT professionals behave differently from our student control group. For instance, professionals are better able to discern the quality of public signals and their decisions are not affected by the domain of earnings. These results have implications for market efficiency and are important in both a positive and normative sense.     

Luxury Goods and the Equity Premium

This paper evaluates the equity premium using novel data on the consumption of luxury goods. Specifying utility as a nonhomothetic function of both luxury and basic consumption goods, we derive pricing equations and evaluate the risk of holding equity. Household survey and national accounts data mostly reflect basic consumption, and therefore overstate the risk aversion necessary to match the observed equity premium. The risk aversion implied by the consumption of luxury goods is more than an order of magnitude less than that implied by national accounts data. For the very rich, the equity premium is much less of a puzzle.     

Does Wage Rank Affect Employees’ Well‐being?

How do workers make wage comparisons? Both an experimental study and an analysis of 16,000 British employees are reported. Satisfaction and well‐being levels are shown to depend on more than simple relative pay. They depend upon the ordinal rank of an individual's wage within a comparison group. “Rank” itself thus seems to matter to human beings. Moreover, consistent with psychological theory, quits in a workplace are correlated with pay distribution skewness.     

Are Analysts’ Recommendations Informative? Intraday Evidence on the Impact of Time Stamp Delays

We demonstrate that time stamps reported in I/B/E/S for analysts’ recommendations released during trading hours are systematically delayed. Using newswire‐reported time stamps, we find 30‐minute returns of 1.83% (?2.10%) for upgrades (downgrades), but for this subset of recommendations we find corresponding returns of ?0.07% (?0.09%) using I/B/E/S‐reported time stamps. We also examine the information content of recommendations relative to management guidance and earnings announcements. Our evidence suggests that analysts’ recommendations are the most important information disclosure channel examined.