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.

2019

High-Skilled Services and Development in China

Lei Fang and Berthold Herrendorf
Working Paper 2019-21
November 2019
The authors document that the high-skill-intensive services sector is underdeveloped in China. Using a model of structural change, they show that this underdevelopment is mostly the result of entry barriers. If they were removed, the high-skill-intensive services sector and gross domestic product would increase considerably.

Foreclosure Externalities and Vacant Property Registration Ordinances

Arnab Biswas, Chris Cunningham, Kristopher Gerardi, and Daniel Sexton
Working Paper 2019-20
November 2019
During the foreclosure crisis, local governments across the United States widely adopted vacant property registration ordinances (VRPOs) to mitigate negative externalities from foreclosed properties. The authors find evidence that the enactment of VPROs in Florida significantly ameliorated negative foreclosure price spillovers.

Consumer Use of Multiple Payment Methods

Oz Shy
Working Paper 2019-19
October 2019
The author applies concentration measures to investigate the degree to which buyers choose to diversify their use of payment methods among cash, credit cards, and debit cards for in-person purchases. The author also investigates which buyers use only one payment instrument.

Leverage over the Firm Life Cycle, Firm Growth, and Aggregate Fluctuations

Emin Dinlersoz, Sebnem Kalemli-Ozcan, Henry Hyatt, and Veronika Penciakova
Working Paper 2019-18
September 2019
The authors document how private firms' leverage evolves over the firm life cycle and relates to financial shocks. During the financial crisis, the deleveraging process undertaken by private firms was associated with lower firm-level and sectoral revenue and employment growth.

Synergizing Ventures

Ufuk Akcigit, Emin Dinlersoz, Jeremy Greenwood, and Veronika Penciakova
Working Paper 2019-17
September 2019
The authors show empirically that venture capitalists (VCs) disproportionately back promising young startups and nurture them into superstar firms. A macroeconomic model highlights these synergies between VCs and startups in explaining the significant impact of VC on aggregate growth.

Driven from Work: Graduated Driver License Programs and Teen Labor Market Outcomes

Laura M. Argys, Thomas A. Mroz, and M. Melinda Pitts
Working Paper 2019-16 (July)
In response to a high incidence of motor vehicle accidents among teens, states have adopted policies that broadly mandate restrictions on novice teen drivers. The authors explore the unintended consequences of these restrictions on the labor/leisure tradeoff of teens.

Common Ownership Does Not Have Anti-Competitive Effects in the Airline Industry

Patrick Dennis, Kristopher Gerardi, and Carola Schenone
Working Paper 2019-15 (July)
Institutional investors often own equity in firms competing in the same product market, and these owners may have an incentive to take actions leading to anti-competitive pricing. The authors use data on airline ticket prices to test whether common owners induce anti-competitive pricing behavior.

Delayed Collection of Unemployment Insurance in Recessions

Zoe Xie
Working Paper 2019-14 (June)
The author shows that allowing delayed unemployment benefit collection can increase unemployed workers' willingness to work, even though more benefits reduce work incentives. She offers evidence using policy variations over time and across states and quantifies the policy effect in a dynamic model.

Surveying Business Uncertainty

David Altig, Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent Meyer, and Nicholas Parker
Working Paper 2019-13a (June; Revised July)
The authors discuss the Survey of Business Uncertainty (SBU), their survey of business executives that elicits subjective probability distributions over own-firm outcomes. SBU data can measure expected future outcomes for the growth of sales, employment, and investment and the uncertainty surrounding those expectations.

The Evolution of Health over the Life Cycle

Roozbeh Hosseini, Karen A. Kopecky, and Kai Zhao
Working Paper 2019-12 (June)
The authors show that the frailty index, a unified objective measure of health, has several advantages over self-reported health status for studying health dynamics over the lifecycle. They then use panel data to estimate a stochastic frailty process.

Cashless Stores and Cash Users

Oz Shy
Working Paper 2019-11a
May 2019 (revised August 2019)
Cashless stores' emergence has led some governments to ban them. This paper considers consumers who pay cash for in-person purchases and consumers who lack credit or debit cards. The author's model estimates the drop in average per-payment consumer surplus if all stores became cashless.

Intellectual Property, Tariffs, and International Trade Dynamics

Federico Mandelman and Andrea Waddle
Working Paper 2019-10 (April)
The authors study the U.S.-China trade relationship. In principle, import tariffs could deter weak protections for U.S. intellectual property in China. However, China could retaliate by further relaxing its protection of intellectual property, implying that cooperation would be mutually beneficial.

Search Complementarities, Aggregate Fluctuations, and Fiscal Policy

Jesús Fernández-Villaverde, Federico S. Mandelman, Yang Yu, and Francesco Zanetti
Working Paper 2019-9 (April)
The authors develop a business cycle model that includes various types of equilibria. They consider an active equilibrium and a passive equilibrium and how government intervention affects economic recovery in both in periods of protracted economic downturns.

The Two-Pillar Policy for the RMB

Urban J. Jermann, Bin Wei, and Vivian Z. Yue
Working Paper 2019-8 (April)
The authors examine China's recent exchange rate policy for its currency, the renminbi (RMB). Their findings suggest that a "two-pillar policy" is in place, which simultaneously seeks to balance RMB index stability and exchange rate flexibility.

Did the 2017 Tax Reform Discriminate against Blue State Voters?

David Altig, Alan Auerbach, Patrick Higgins, Darryl Koehler, Laurence Kotlikoff, Michael Leiseca, Ellyn Terry, and Victor Ye
Working Paper 2019-7 (April)
Examining the effects of the Tax Cut and Jobs Act of 2017 (TJCA), the authors find that the TJCA had different effects on rich households in blue states and red states.

Is Stricter Regulation of Incentive Compensation the Missing Piece?

Larry D. Wall
Working Paper 2019-6 (March)
The financial system has become less risky since the crisis, but it is still not safe enough. After reviewing the literature, the author concludes incentive compensation regulation may help. However, we cannot confidently say such regulation is the missing piece.

Intermediation in Markets for Goods and Markets for Assets

Ed Nosal, Yuet-Yee Wong, and Randall Wright
Working Paper 2019-5 (March)
Using equilibrium search theory, the authors study intermediation and its efficiency. Their results are consistent with the view that intermediation in financial markets is more prone to instability than in goods markets.

A Theory of Housing Demand Shocks

Zheng Liu, Pengfei Wang, and Tao Zha
Working Paper 2019-4 (March)
Standard macro models fail to generate a volatile price-to-rent ratio that comoves with the house price (the "price-rent puzzle"). The authors provide a microeconomic foundation that accounts for this fact.

Bayesian Nonparametric Learning of How Skill Is Distributed across the Mutual Fund Industry

Mark Fisher, Mark J. Jensen, and Paula Tkac
Working Paper 2019-3 (March)
The authors use Bayesian nonparametric learning to estimate the skill of actively managed mutual funds and also to estimate the population distribution for this skill. They find the population distribution of skill to be multi-modal and skewed toward higher levels of performance.

How Currency Denomination and the ATM Affect the Way We Pay

Oz Shy
Working Paper 2019-2a (revised August 2019)
Exploring how consumers pay for goods and services, the author investigates how the denominations dispensed by automated teller machines affect consumers' decision of when to use cash and when to use credit or debit cards.

Migration Constraints and Disparate Responses to Changing Job Opportunities

Kalee E. Burns and Julie L. Hotchkiss
Working Paper 2019-1a (revised May 2019)
Investigating the role constraints to migration might play in explaining racial/ethnic disparities in the labor market, the authors examine the distributional mismatch between race/education specific workers and jobs among minorities relative to white non-Hispanics. Their findings suggest that social constraints might play a role in the mismatch.

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