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Atlanta Fed Working Papers

The Research Department of the Federal Reserve Bank of Atlanta publishes a working paper series to convey the research of staff economists and visiting scholars and stimulate professional discussion and exploration of economic and financial subjects.


The Impact of Medical and Nursing Home Expenses and Social Insurance
Karen A. Kopecky and Tatyana Koreshkova
Working Paper 2010-19 (December)
The authors examine old-age health expenses, calibrating their model to the United States, and find that nursing home expenses play a significant role in the savings of the wealthy and on aggregate.

Confronting Model Misspecification in Macroeconomics
Daniel F. Waggoner and Tao Zha
Working Paper 2010-18a (Revised February 2012)
The authors propose a framework for merging multiple models, incorporating uncertainty about both models and parameters. Their merged model alters the inferences about structural parameters and impulse responses.

How Amsterdam Got Fiat Money
Stephen Quinn and William Roberds
Working Paper 2010-17 (December)
The authors analyze a fiat money regime that was introduced by the Bank of Amsterdam in 1683. Reconstructing the bank's balance sheets, they describe how fiat money affected the bank's monetary and credit policies.

Entry Cost, Financial Friction, and Cross-Country Differences in Income and TFP
Lei Fang
Working Paper 2010-16 (September)
Using a model calibrated to establishment-level statistics in the United States, the author finds that financial friction amplifies the effects of entry cost on cross-country differences in income and TFP.

The Effect of Social Entitlement Programs on Private Transfers: New Evidence of Crowding Out
Kristopher Gerardi and Yuping Tsai
Working Paper 2010-15 (September)
Studying the introduction of a Taiwanese social security program, the authors find that the probability of an adult child providing monetary transfers to his or her parents decreases substantially if the parents receive public assistance.

Expected Returns to Stock Investments by Angel Investors in Groups
Ramon P. DeGennaro and Gerald P. Dwyer
Working Paper 2010-14 (August)
Angel investors fund thousands of entrepreneurial projects annually. The authors' estimates indicate that the expected return for doing so is about 70 percent per year, compensating for the substantial risk.

Fixed-Term and Permanent Employment Contracts: Theory and Evidence
Shutao Cao, Enchuan Shao, and Pedro Silos
Working Paper 2010-13 (August)
The authors provide a theory of why firms offer both employment contracts with high job protection and contracts with no protection. Using that theory, they find that increasing firing costs can increase wage inequality.

Decomposing the Education Wage Gap: Everything but the Kitchen Sink
Julie L. Hotchkiss and Menbere Shiferaw
Working Paper 2010-12 (August)
The wage gap between high school and college graduates began widening dramatically in the 1980s and 1990s. Using multiple data sources, the authors examine the source of this gap.

Further Results on the Limiting Distribution of GMM Sample Moment Conditions
Nikolay Gospodinov, Raymond Kan, and Cesare Robotti
Working Paper 2010-11 (July)
Extending Hansen (1982), the authors provide new results on the limiting behavior of linear combinations of generalized method of moments (GMM) sample moment conditions and demonstrate the statistical properties of the proposed asymptotic approximation using simulation.

Financial Literacy and Subprime Mortgage Delinquency: Evidence from a Survey Matched to Administrative Data
Kristopher Gerardi, Lorenz Goette, and Stephan Meier
Working Paper 2010-10 (April)
The working paper investigates whether certain aspects of borrowers' financial literacy, namely numerical ability and economic knowledge, may have played a role in the subprime mortgage crisis.

Prudential Discipline for Financial Firms: Micro, Macro, and Market Structures
Larry D. Wall
Working Paper 2010-9 (March)
The author discusses ways to strengthen micro- and macroprudential supervision and restore credible market discipline in the wake of the breakdowns in the prudential discipline that led to the recent global financial crisis.

What Explains Differences in Foreclosure Rates? A Response to Piskorski, Seru, and Vig
Manuel Adelino, Kristopher Gerardi, and Paul Willen
Working Paper 2010-8 (March)
Responding to earlier research, the authors find that early payment defaults are not a valid way of studying foreclosure rates and that using modification rates of delinquent mortgages allows better study of renegotiation activity.

The Information Revolution and Small Business Lending: The Missing Evidence
Robert DeYoung, W. Scott Frame, Dennis Glennon, and Peter Nigro
Working Paper 2010-7 (March)
The authors provide empirical confirmation for the widely accepted conjecture that information technology was the primary driver of small business borrower-lender distances in recent years.

Tests of Ex Ante versus Ex Post Theories of Collateral Using Private and Public Information
Allen N. Berger, W. Scott Frame, and Vasso Ioannidou
Working Paper 2010-6 (March)
The authors study the role of collateral in loan contracting using unique credit registry data that allow for the identification of effects attributable to different collateral theories.

What Do Premiums Paid for Bank M&As Reflect? The Case of the European Union
Jens Hagendorff, Ignacio Hernando, Maria J. Nieto, and Larry D. Wall
Working Paper 2010-5 (March)
Studying European bank mergers between 1997 and 2007, the authors find that stricter bank regulation and stronger deposit insurance schemes lower the takeover premiums acquiring banks pay.

On the Hansen-Jagannathan Distance with a No-Arbitrage Constraint
Nikolay Gospodinov, Raymond Kan, and Cesare Robotti
Working Paper 2010-4 (March)
The author discusses ways to strengthen micro- and macroprudential supervision and restore credible market discipline in the wake of the breakdowns in the prudential discipline that led to the recent global financial crisis.

Investment-Specific Technology Shocks and International Business Cycles: An Empirical Assessment
Federico S. Mandelman, Pau Rabanal, Juan F. Rubio-Ramírez, and Diego Vilán
Working Paper 2010-3a (Revised September 2010)
This paper shows that while a thoughtful calibration of investment-specific technology shocks is useful to address several existent puzzles in the open macro literature, the actual estimated shocks are powerless to explain any of them.

Assessing the Impact of Education and Marriage on Labor Market Exit Decisions of Women
Julie L. Hotchkiss, M. Melinda Pitts, and Mary Beth Walker
Working Paper 2010-2 (February)
Investigating women's decision to exit the labor market upon the birth of a child, the authors determine exit rates among single, less educated women are consistent with change in overall female labor force participation.

Do Credit Constraints Amplify Macroeconomic Fluctuations?
Zheng Liu, Pengfei Wang, and Tao Zha
Working Paper 2010-1 (February)
Combining two key features into a dynamic stochastic general equilibrium model, the authors are able to generate an empirically important mechanism that explains the persistent comovements between housing prices and business investment.

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