On Friday, I went to the NBER EFG (Economic Fluctuations and Growth) meeting at the SF Fed. Program and papers here. The papers were great, the discussions were great, the comments were great, even the food was good. (You know you're in California when the conference snack is avocado toast.)The papers:1) Fatih Guvenen, Gueorgui Kambourov, ...
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1) Fatih Guvenen, Gueorgui Kambourov, Burhanettin Kuruscu, Sergio Ocampo-Diaz, Daphne Chen, "Use It Or Lose It: Efficiency Gains from Wealth Taxation" Discussant: Roger H. Gordon.
If everyone earns 4% return on their investments, a 50% rate of return tax (combining corporate income and personal taxes) is the same thing as a 2% wealth tax. Everyone gets a 2% after tax return on their investments.
But what if some people -- Mike, in the example, -- are skillful entrepreneurs and can earn 20% rate of return, while and others -- Fredo -- earn 0% returns. Now a 50% rate of return tax lowers Mike's return to 10% but has no effect on Fredo. If the government raises the same amount of money -- 10 cents -- from a 0.10/2.20 = 4.5% wealth tax, Mike earns a (1-0.045) x 1.20 -1 = 14.6% rate of return, and Fredo earns a - 4.5% rate of return. The incentive to be Mike rises, and to be Fredo declines.
The paper has a model with all sorts of useful bells and whistles -- you want these to do tax policy -- building on this intuition. The model fists all sorts of facts including the wealth distribution. The wealth tax ends up helping workers too, because wages rise.
In the simulated model calibrated to the U.S. data, a revenue-neutral tax reform that replaces capital income tax with a wealth tax raises welfare by about 8% in consumption-equivalent terms. ... optimal wealth taxes result in more even consumption and leisure distributions (despite the wealth distribution becoming more dispersed)...wealth taxes can yield both efficiency and distributional gainsMuch discussion, centering on whether skill really is tied to returns.
2) Matteo Maggiori, Brent Neiman, Jesse Schreger, "International Currencies and Capital Allocation"
Discussant: Harald Uhlig (funniest discussion award)
Mutual funds have a strong home currency bias, which completely drives out home bias. These investors like to hold bonds in their own currency, but not necessarily issued by companies in their home country. If you want to sell bonds to Canadians -- even Canadian mutual funds -- sell them in Canadian dollars. There is one exception: the dollar. When funds branch out to other currencies, they start with dollars. Likewise, small companies primarily raise money in their own currency. When they branch out, they start with dollars.
3) Katarína Borovičková, Robert Shimer, "High Wage Workers Work for High Wage Firms" Discussant: Isaac Sorkin
A clever measure of correlation, showing that, as the title says, high wage workers work for companies that pay high average wages, and also low wage workers work for companies that pay low wages. This seems obvious, but it has not been in the data. The previous approach to this question by Abowd, Kramarz and Margolis (1999) found no correlation. A big discussion about correlation vs the AKM regression estimate. It turns out the definition of correlation is very subtle, and depends on the kind of search model you have in mind.
Ellen McGratten asked a sharp question: Wait, if a firm outsources its janitors, does this not spike? Really we are learning about the boundaries of the firm. Answer yes, and really we want to know whether high wage people work with other high wage people. More discussion about what the fact means about joint production and the sorting and matching process.
4) Marcus Hagedorn, Iourii Manovskii, Kurt Mitman, "The Fiscal Multiplier" Discussant: Adrien Auclert