Microeconomics & International Trade Seminars

Spring 2017
Thursday 1:40 - 3:00 PM
499 Engineering II

April 6
Tarun Sabarwal, University of Kansas
"Directional Monotone Comparative Statics"

ABSTRACT:
Many questions of interest in economics can be stated in terms of monotone comparative statics: If a parameter of a constrained optimization problem increases, when does its solution increase as well. This paper characterizes monotone comparative statics in different directions in finite-dimensional Euclidean space. These new characterizations are ordinal and retain the same flavor as their counterparts in the standard theory, showing new connections to the standard theory. The results are highlighted by several applications in consumer theory, producer theory and game theory. These applications were previously outside the scope of the standard theory of monotone comparative statics.  



April 20
Kelly Bedard, UC Santa Barbara
"Equal but Inequitable: Who Benefits from Gender-Neutral Tenure Clock Stopping Policies?"
Host: Rob Fairlie
ABSTRACT:
Many skilled professional occupations are characterized by an early period of intensive skill accumulation and career establishment. Examples include law firm associates, surgical residents, and untenured faculty at research-intensive universities. High female exit rates are sometimes blamed on the inability of new mothers to survive the sustained negative productivity shock associated with childbearing and early childrearing in these environments. Gender-neutral family policies have been adopted in some professions in an attempt to “level the playing field.” The gender-neutral tenure clock stopping policies adopted by the majority of research-intensive universities in the United States in recent decades are an excellent example. But to date, there io empirical evidence showing that these policies help women. Using a unique data set on the universe of assistant professor hires at top-50 economics departments from 1985-2004, we show that the adoption of gender-neutral tenure clock stopping policies substantially reduced female tenure rates while substantially increasing male tenure rates.


April 27
James Sallee, UC Berkeley
"Corrective Policy and Goodhart’s Law: The Case of Carbon Emissions from Automobiles"
Host: Justin Marion
ABSTRACT:
Firms sometimes comply with externality-correcting policies by gaming the measure that determines policy. We show theoretically that such gaming can benefit consumers, even when it induces them to make mistakes, because gaming leads to lower prices by reducing costs. We use our insights to quantify the welfare effect of gaming in fuel-consumption ratings for automobiles, which we show increased sharply following aggressive policy reforms. We estimate a structural model of the car market and derive empirical analogs of the price effects and choice distortions identified by theory. We find that price effects outweigh distortions; on net, consumers benefit from gaming.


May 4
Teevrat Garg, UC San Diego
"Human Capital Costs of Climate Change: Evidence from Test Scores in India"
Host: Ajay Shenoy
ABSTRACT:
We present estimates of the effect of temperature on cognitive performance, and find that an additional 10 days in a year above 29C reduces math and reading test scores by 0.03 and 0.02 standard deviations respectively. However, in contrast to prior work, we find evidence for an income mechanism - hot days during the growing season reduce agricultural yields and test score performance with comparatively modest effects of hot days in the non-growing season. The roll-out of a conditional cash transfer program, by providing a safety net for the poor, weakens the link between temperature and test scores. Our results suggest that climate change will have disproportionate and large negative impacts on human capital accumulation of poor populations in agrarian economies, likely increasing the persistence of poverty.


May 11
Matt Jackson, Stanford University
"TBA"
Host: Ajay Shenoy


May 30
Melanie Morten, Stanford University
"TBA"
Host: Jon Robinson

June 8
Elana Asparouhova, University of Utah
"TBA"
Host: Dan Friedman


Fall 2016
Thursday 1:40 - 3:00 PM
499 Engineering II


September 22
Brian Giera, UC Santa Cruz
"The Reinvestment Puzzle: Evidence from a Field Experiment with Micro-Entrepreneurs in Urban Ethiopia"
Host: Ajay Shenoy
ABSTRACT:
We use data from a field experiment with micro-entrepreneurs in Ethiopia to look at what prevents small firms from realizing high marginal returns to investment in their business. We put forward two explanations: (1) shop owners have trouble saving marginal profits to reinvest the following day and (2) shop owners make complex business decisions subject to informational and attention constraints. To test these ideas, we provided firms with an informal savings device (a leather wallet) to help earmark savings for the following day, and a rule-of-thumb informational poster to be placed in their business to help alleviate inattention/informational frictions. We found the wallet led to increased business savings, increased separation of personal and household money, and a 32% increase in profits over the previous month. The poster was found to increase hours worked, customers per day, investment per day, and daily/monthly profits ranging from 10-14%. We conclude that simplified and convenient management information can bring the performance of their micro-enterprise to the ``top of mind'', both during the day while they run their business, and at night when they head home. 


September 29
Melissa Dell, MIT
"Nation Building Through Foreign Intervention: Evidence from Discontinuities in Military Strategies"
Host: Ajay Shenoy
ABSTRACT:
This study uses discontinuities in U.S. strategies employed during the Vietnam War to estimate their causal impacts. It identifies the effects of bombing by exploiting rounding thresholds in an algorithm used to target air strikes. Bombing increased the military and political activities of the communist insurgency, weakened local governance, and reduced non-communist civic engagement. The study also exploits a spatial discontinuity across neighboring military regions, which pursued different counterinsurgency strategies. A strategy emphasizing overwhelming firepower plausibly increased insurgent attacks and worsened attitudes towards the U.S. and South Vietnamese government, relative to a hearts and minds oriented approach.


October 13
Joseph Kuehn, Cal State-East Bay
"Estimating Auctions with Externalities:  The Case of USFS Timber Auctions"
Host: Justin Marion
ABSTRACT:
This paper studies how bidding strategies and auction outcomes are affected by downstream competition, particularly for USFS timber auctions. This is done by extending the auction estimation literature to a model where outside competition affects bidding behavior in that bidders are then not only concerned with whether they win the auction, but also the identity of the winner if it is not them. Applying the estimation technique to the case of timber auctions, I find that downstream competition in the lumber industry affects the bidding behavior of mill bidders, sometimes leading to the misallocation of timber tracts.


November 10
Isaac Sorkin, Stanford University
"Ranking Firms Using Revealed Preference"
Host: Ajay Shenoy
ABSTRACT:
Firms account for a substantial share of earnings inequality. Although the standard explanation is that search frictions support an equilibrium with rents, this paper finds a significant role for compensating differentials. To reach this finding, this paper develops a structural search model and estimates it on U.S. administrative data. The model analyzes how workers move between firms. Compensating differentials are revealed when workers systematically move to lower-paying firms, while rents are revealed when workers systematically move to higher-paying firms.Hope you all can make it.


November 17
Mattjew Gentzkow, Stanford University
"Measuring Polarization in High-Dimensional Data: Method and Application to Congressional Speech"
Host: Ajay Shenoy
ABSTRACT:
We study trends in the partisanship of Congressional speech from 1873 to 2009. We define partisanship to be the ease with which an observer could infer a congressperson’s party from a fixed amount of speech, and we estimate it using a structural choice model and methods from machine learning. The estimates reveal that partisanship is far greater today than at any point in the past. Partisanship was low and roughly constant from 1873 to the early 1990s, then increased dramatically in subsequent years. Evidence suggests innovation in political persuasion beginning with the Contract with America, possibly reinforced by changes in the media environment, as a likely cause. Naive estimates of partisanship are subject to a severe finite-sample bias and imply substantially different conclusions.


December 1
Judson Boomhower, Stanford University
"Do Energy Efficiency Investments Deliver at the Right Time"
Host: Jeremy West
ABSTRACT:
Electricity cannot be cost-effectively stored even for short periods of time. Consequently, wholesale electricity prices vary widely across hours of the day with peak prices frequently exceeding off-peak prices by a factor of ten or more. Most analyses of energy-efficiency policies ignore this variation, focusing on total energy savings without regard to when those savings occur. In this paper we demonstrate the importance of this distinction using novel evidence from a rebate program for air conditioners in Southern California. We estimate electricity savings using hourly smart-meter data and show that savings tend to occur during hours when the value of electricity is high. This significantly increases the overall value of the program, especially once we account for the large capacity payments received by generators to guarantee their availability in high-demand hours. We then compare this estimated savings profile with engineering-based estimates for this program as well as a variety of alternative energy-efficiency investments. The results illustrate a surprisingly large amount of variation in economic value across investments. 


Winter 2017
Thursday 1:30 - 3:00 PM
499 Engineering II

January 17 (Note different day)
Lauren Bergquist, UC Berkeley
"Pass-through, Competition, and Entry in Agricultural Markets: Experimental Evidence from Kenya"
Host: Alan Spearot
ABSTRACT:
African agricultural markets are characterized by low revenues for smallholder farmers and high food prices for consumers. There has long been concern that this price wedge between farmers and consumers – and the resulting loss in producer and consumer welfare – are driven in part by imperfect competition among the intermediaries that connect them. In this paper, I implement three randomized control trials that are tightly linked to a model of market competition in order to estimate key parameters governing the competitive environment of Kenyan agricultural markets. First, I reduce the marginal costs of traders in randomly selected markets, and find that only 22% of this cost reduction is passed through to consumers. Second, to elicit the shape of consumer demand that these traders face, I randomize price discounts and measure the quantities that customers purchase at these prices. Taken together, these estimates reveal a high degree of collusion among intermediaries, with large implied losses to consumer welfare and overall market efficiency. Third, given that a natural policy response to limited competition is to encourage greater firm entry, I randomly incentivize the entry of new traders into markets. By capturing the resulting effect on local market prices, I identify the implied change in the competitive environment due to entry. The findings have implications for the incidence of technological and infrastructure changes in African agriculture and for the policy responses aimed at improving the market environment.


January 19
Yulong Wang, Princeton
"Inference in the Threshold Model"
Host: Carlos Dobkin
ABSTRACT:
This paper studies inference about the values of the parameters in the threshold model in a generalized method of moments (GMM) framework. First, we establish that the extensively studied least squares method leads to substantially oversized tests and confidence intervals when the coefficient change is not large. Second, by re-ordering the data to recast the threshold model as a structural break problem, we construct tests that control size under a large range of empirically relevant moderate coefficient changes and are approximately efficient in a well-defined sense. Finally, we modify our approach to encompass inference problems in a variety of additional widely studied models. The accuracy of the asymptotic approximations is evaluated by Monte Carlo simulations. The empirical applicability is illustrated through two applications: (i) testing if there exists a threshold effect of public debt on economic growth; (ii) constructing a confidence interval on the tipping point in the segregation problem studied by Card, Mas, and Rothstein (2008).


January 24 (Note different day)
Jessie Li, Stanford University
"The Numerical Delta Method and Bootstrap"
Host: Carlos Dobkin
ABSTRACT:
This joint paper with Han Hong studies inference on nondifferentiable functions using methods based on numerical differentiation. The first part of the talk will show how the numerical delta method provides consistent inference for nondifferentiable functions that are directionally differentiable. The motivating example will be dominance testing on quantile treatment effects in the Tennessee STAR experiment. Other examples of directionally differentiable functions arise in economic applications such as threshold regression, incomplete auction models, and models with partially identified parameters. The second part of the talk will discuss a numerical bootstrap method that can consistently estimate the limiting distribution of estimators in many cases where the conventional bootstrap is known to fail. Examples include the maximum score estimator, LASSO, and 1-norm Support Vector Machine regression.


January 25 (Note different day)
Roy Allen, UC San Diego
"Identification of Average Demand Models"
Host: Carlos Dobkin
ABSTRACT:
This paper, coauthored with John Rehbeck (UCSD), studies the nonparametric identification of a model of average demand with multiple goods, once unobservable heterogeneity has been integrated out. The model can be used for bundles, decisions under uncertainty, stochastic choice, and other examples. Optimizing behavior implies an analogue of Slutsky symmetry, which we exploit to show nonparametric identification of the model. Our main results do not rely on special regressors or identification at infinity. As a special case we provide new conditions for identification of additive random utility models (ARUM). These conditions also apply to a stochastic choice model allowing bounded rationality. In an illustrative application, we refute ARUM in favor of this more general model.


January 26Yatang Lin, London School of Economics
"The Long Shadow of Industrial Pollution: Environmental Amenities and the Distribution of Skills"
Host: Alan Spearot
ABSTRACT:
This paper presents theory and evidence on the role of environmental amenities in shaping the competitiveness of post-industrial cities. I assemble a rich database at a fine spatial resolution to examine the impact of historical pollution on the distribution of skilled workers and residents within cities today.  I find that census tracts downwind of highly polluted 1970s industrial sites were associated with higher pollution levels in the 1970s but not after 2000. However, they were less skilled and had lower wage and housing values in 2000, a pattern which became more prominent between 1980 and 2000. These findings suggest the presence of skill sorting on pollution and strong subsequent agglomeration effects.  To quantify the contribution of different mechanisms, I build and estimate a multi-sector spatial equilibrium framework that introduces heterogeneity in local productivity and workers' valuation for local amenities across sectors, and allows initial sorting to be magnified by production and residential externalities. Estimation of the model suggests that historical pollution is associated with lower current productivity and amenity levels. The effects are more pronounced for productivity, more skilled sectors and central tracts. I use the framework to evaluate the impact of counterfactual pollution cuts in different parts of cities on nationwide welfare and the cross-city distribution of skills.


January 27 (Note different day)
Matthew Grant, Yale University
"Why Special Economic Zones? Using Trade Policy to Discriminate Across Importers"
Host: Alan Spearot
ABSTRACT:
Special economic zones (SEZs) are a common and economically important policy tool used around the world to lower tariffs on intermediate goods for selected manufacturers. Why would governments want to do this? In contrast to existing models of trade policy, which assume that the tariff on a good is uniform across all importers, I provide a theoretical framework in which tariff discrimination across importers is optimal policy for a government motivated by both political and welfare considerations. Optimal policy follows a simple two-tiered tariff rule, in which some importers are charged the prevailing tariff, and other firms are charged a reduced tariff. This policy is implemented in practice through selective permission to produce in SEZs. The model offers predictions about the relationship between SEZ size and import volumes in equilibrium. It also predicts that the final goods industries prioritized for duty-reduced access to a particular intermediate through SEZs will be politically influential, elastic users of the intermediate, and protected in equilibrium by a low ad-valorem equivalent final goods tariff. Using a novel data set I constructed from public records covering the universe of active SEZs in the United States, I show that the model's predictions about the size and industrial composition of SEZs are consistent with the way they are implemented in practice.


February 6 (Note different day)
Sharat Ganapati
"The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies"
Host: Alan Spearot


February 7 (Note different day)
Heitor Pellegrina, Brown University
"The Causes and Consequences of Agricultural Specialization in Brazil"
Host: Alan Spearot


February 23
Joel Sobel, UC San Diego
"Iterative Weak Dominance and Interval-Dominance Supermodular Games"
Host: Natalia Lazzati
ABSTRACT:
This paper extends Milgrom and Robert's   treatment of supermodular games in two ways.  It points out that their main characterization result holds under a   weaker assumption.  It refines the arguments to provide bounds on the set of strategies that survive iterative deletion of weakly dominated strategies.  I derive the bounds by iterating the best-response correspondence. I give conditions under which they are independent of the order of deletion of dominated strategies. The results have implications for equilibrium selection and dynamic stability in games.


March 9
Gabriela Rubio, UC Merced
"How Love Conquered Marriage: Economic Development and the Disappearance of Arranged Marriages"
Host: Ajay Shenoy


March 16
Katherine Casey, Stanford University
"Debates: Voting and Expenditure Responses to Political Communication"
Host: Ajay Shenoy
ABSTRACT:
Candidate debates have a rich history and remain integral to contemporary campaign strategy. There is, however, no evidence that they affect voter behavior. The scarcity of political information in the developing world offers an attractive testing ground. Using experimental variation in Sierra Leone, we find that public debate screenings build political knowledge that changes the way people vote, which triggers a campaign expenditure response by candidates, and fosters accountability pressure that disciplines the subsequent spending of elected officials.  We parse the effects of information conveyed about policy versus charisma, and find that both matter.  The results show how political communication can trigger a chain of events that begins with voters and ultimately influences policy.