Working Papers

For four decades economists have been finding that the forward discount is a very biased forecast of future changes in the exchange rate. The carry trade makes money, on average. For just as long, they …

In a recent CROWE Policy Brief, Noah Williams (2018) argues that the recent increases in Minnesota’s minimum wage relative to Wisconsin’s is a central reason why Minnesota’s employment in limited service restaurants (aka fast food establishments) has declined. 

Purchasing power parity (PPP), the doctrine that prices of goods and services expressed in a common currency are equalized, is described.

Tracking the business cycle at the level of state economies and discerning the impact of fiscal and regulatory policies – as well as nationwide policies – on state economies has been hampered by a limited number of available sets of high frequency indicators. In this paper, we review the data sources and series available for a cross-section of states, with discussion of the associated advantages and disadvantages. We provide estimates of the correlation and comovement of various indicators with state-level real GDP, and how different indicators define turning points in state economies. Finally, we illustrate the usefulness of high frequency state-level GDP by evaluating whether a particular state economy is performing in line with expectations.

We re-examine the Fama (1984) puzzle – the finding that ex post depreciation and
interest differentials are negatively correlated, contrary to what theory suggests – for
eight advanced country exchange rates against the US dollar, over the period up to
February 2016. The rejection of the joint hypothesis of uncovered interest parity (UIP)
and rational expectations – sometimes called the unbiasedness hypothesis – still occurs,
but with much less frequency. Strikingly, in contrast to earlier findings, the Fama
regression coefficient is positive and large in the period after the global financial crisis.
However, using survey based measures of exchange rate expectations, we find much
greater evidence in favor of UIP. Hence, the main story for the switch in Fama
coefficients in the wake of the global financial crisis is mostly – but not entirely – a
change in how expectations errors and interest differentials co-move, though the risk
premium also plays a critical role for safe haven currencies (Japanese yen and Swiss
franc).

Despite the growing attention to technology adoption in the economics literature, knowledge gaps remain regarding why some valuable technologies are slow to be adopted. This paper contributes to our understanding of agricultural technology adoption by showing that a focus on yield gains may, in some contexts, be misguided. We study a technology in Ethiopia that has no impact on yields, but that has nonetheless been widely adopted. Using three waves of panel data, we estimate a correlated random coefficient model and calculate the returns to improved chickpea in terms of yields, costs, and prots. We nd that farmers’ comparative advantage does not play a signicant role in their adoption decisions and hypothesize that this is due to the overall high economic returns to adoption, despite the limited yield impacts of the technology. Our results suggest economic measures of returns may be more relevant than increases in yields in explaining technology adoption decisions.

This report presents the results from our independent analysis of One Acre Fund’s (1AF) randomized control trial in the Teso region of Kenya. The main aim of this study is to assess program impacts on maize yields and profits from maize and beans. The results show that 1AF participation leads to statistically and economically significant increases in both yields and profits: 1AF participation resulted in a roughly 34 percent increase in maize yields per farmer, and almost 20 percent increase in maize and bean profits. We also investigate whether 1AF participation has persistent impacts for farmers even once they have stopped participating, but we found no differences between control group farmers who were former clients and those that had never participated. Finally, using a quasi-experimental approach using data from the four surrounding districts in which 1AF operates, we can see that results from propensity score analysis yields impact estimates that are somewhat larger in magnitude than those from the experimental analysis. These differences could be driven by differential program impact across districts, or due to methodological differences between the experimental and quasi-experimental approaches.

Many states have experienced closures of abortion clinics in response to a variety of circumstances, such as legislative acts or threats of violence. A recent prominent example occurred in Texas following the 2013 passage of Texas House Bill 2, which banned abortion after 20 weeks, required doctors to have admitting privileges at a nearby hospital, and held abortion clinics to the same standards as other surgical centers.1 The Supreme Court struck down the law in 2016 for placing an undue burden on women seeking abortion care.2 Still, Grossman et al. (2017) documented a decline in providers from 41 in 2012 to 17 in June 2016, including a reduction of abortion by 14% between 2013 and 2014. For this report, we collected information on abortion service provider locations in Wisconsin, and those nearest to the state border in Minnesota, Michigan, Illinois, and Iowa. This report documents changes in distances to the nearest abortion provider for Wisconsin residents over the period 2010-2017.

For public managers facing political and structural constraints, transformational leadership promises to meaningfully improve outcomes by communicating an inspiring vision of the organization. But this promise rests to a great degree upon the communication skills and behaviors of the leader. A better understanding of how transformational leadership functions in organizations therefore requires a deeper application of theory from the field of communication. We explore the question of what communication behaviors facilitate transformational leadership. We apply a media richness framework to propose that transformational leaders will be most effective when employing a face-to-face dialogue approach to communication. Using a multi-source longitudinal research design, we find support for this proposition in an empirical test on 256 Danish tax units, lower- and upper secondary schools, childcare centers, and bank branches. We also find that size matters, with the effectiveness of face-to-face dialogue declining as the organization becomes larger.

Global current account imbalances have reappeared, although the extent and distribution of these imbalances are noticeably different from those experienced in the middle of the last decade. What does that recurrence mean for our understanding of the origin and nature of such imbalances? Will imbalances persist over time? Informed by empirical estimates of the determinants of current account imbalances encompassing the period after the global recession, I find that – as before – the observable manifestations of the factors driving the global saving glut have had limited explanatory power for the time series variation in imbalances. Nonethelesss, fiscal factors have accounted for a noticeable share of the recent variation in imbalances, including in the US and Germany. Examining observable policy actions, it’s clear that net official flows have been associated with some share of imbalances, although tracing out the motivations for intervention is difficult. Looking forward, it’s clear that policy can influence global imbalances, although some component of the US deficit will likely remain given the US role in generating safe assets.