Arbitrage in Housing Markets. Edward Glaeser, December 15, 2007, Paper. “Urban economists understand housing prices with a spatial equilibrium approach that assumes people must be indifferent across locations. Since the spatial no arbitrage condition is inherently imprecise, other economists have turned to different no arbitrage conditions, such as the prediction that individuals must be indifferent between owning and renting. This paper argues the predictions from these non-spatial, financial no arbitrage conditions are also quite imprecise. Owned homes are extremely different from rental units and owners are…” Link

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Electrochemical Acceleration of Chemical Weathering as an Energetically Feasible Approach to Mitigating Anthropogenic Climate Change. Michael Aziz, Kurt Zenz House, Daniel Schrag, December 15, 2007, Paper. “We describe an approach to CO… capture and storage from the atmosphere that involves enhancing the solubility of CO… in the ocean by a process equivalent to the natural silicate weathering reaction. HCl is electrochemically removed from the ocean and neutralized through reaction with silicate rocks. The increase in ocean alkalinity resulting from the removal of HCl causes atmospheric CO… to dissolve into the…” Link

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Did the Death of Distance Hurt Detroit and Help New York? Edward Glaeser, Giacomo Ponzetto, December 2007, Paper. “Urban proximity can reduce the costs of shipping goods and speed the flow of ideas. Improvements in communication technology might erode these advantages and allow people and firms to decentralize. However, improvements in transportation and communication technology can also increase the returns to new ideas, by allowing those ideas to be used throughout the world. This paper presents a model that illustrates these two rival effects that technological progress can have on cities…” Link

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The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution. N. Gregory Mankiw, Matthew Weinzierl, December 2007, Paper. “Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This paper shows that the standard Utilitarian framework for tax policy analysis answers this question in the affirmative. Moreover, based on the empirical distribution of height and wages, the optimal height tax is substantial: a tall person earning $50,000 should pay about $4,500 more in taxes than a short person earning the same income. This result has…” Link

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Profits and Politics: Coordinating Technology Adoption in Agriculture, Rohini Pande, December 2007, Paper, “This paper examines the political economy of coordination in a simple two- sector model in which individuals’ choice of agricultural technology affects industrialization. We demonstrate the existence of multiple equilibria; the econ- omy is either characterized by the use of a traditional agricultural technology and a low level of industrialization or the use of a mechanized technology and a high level of industrialization. Relative to the traditional technology, the mechanized technology increases output but leaves some population groups worse off. We show that the distributional implications of choosing the mechanized technology restrict the possibility of Pareto-improving coordination by an elected policy-maker, even when we allow for income redistribution.” Link

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Happiness, Contentment and other Emotions for Central Banks. Rafael Di Tella, November 7, 2007, Paper. “We show that data on satisfaction with life from over 600,000 Europeans are negatively correlated with the unemployment rate and the inflation rate. Our preferred interpretation is that this shows that emotions are affected by macroeconomic fluctuations. Contentment is, at a minimum, one of the important emotions that central banks should focus on. More ambitiously, contentment might be considered one of the components of utility. The results may help central banks understand the tradeoffs that the public is willing to accept in terms of unemployment for inflation, at least in terms of keeping the average level of one particular emotion (contentment) constant…” Link

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The Only Game in Town: Stock-Price Consequences of Local Bias. Jeremy Stein, November 2007, Paper. “Theory suggests that, in the presence of local bias, the price of a stock should be decreasing in the ratio of the aggregate book value of firms in its region to the aggregate risk tolerance of investors in its region. Using data on U.S. states and Census regions, we find clear-cut support for this proposition. Most of the variation in the ratio of interest comes from differences across regions in aggregate book value per capita. Regions with low population density—e.g., the Deep South—are home to relatively few firms per capita…” Link

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Long-Run Changes in the U.S. Wage Structure: Narrowing, Widening, Polarizing. Lawrence Katz, Claudia Goldin, November 2007, Paper. “The U.S. wage structure evolved across the last century: narrowing from 1910 to 1950, fairly stable in the 1950s and 1960s, widening rapidly during the 1980s, and “polarizing” since the late 1980s. We document the spectacular rise of U.S. wage inequality after 1980 and place recent changes into a century-long historical perspective to understand the sources of change. The majority of the increase in wage inequality since 1980 can be accounted for by rising educational wage differentials, just as a…” Link

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Supreme Court Amicus Brief Regarding Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington. William Hogan, Joseph Kalt, Steven Shavell, November 1, 2007, Brief. “Economists have long recognized that certainty of contract is essential to a healthy economy. Long-term forward contracts, in particular, help reduce financial risk. Those contracts can only accomplish that goal, however, if parties know the contracts will be enforced. From an economic and policy standpoint, long-term energy contracts should be abrogated only in truly exceptional circumstances. The mere fact that a price…” Link

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Latin America and The World Economy. Dale Jorgenson, October 29, 2007, Book Chapter. “This paper analyzes the impact of investment in information technology (IT) on the recent resurgence of growth in Latin America and the world economy. We describe the growth of the world economy, seven regions, including Latin America, and fourteen major economies during the period 1989-2005. We allocate the growth of world output between input growth and productivity and find, surprisingly, that input growth greatly predominates! Moreover, differences in per capita output levels are explained by differences in per capita input, rather than…” Link

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