Subprime Mortgage Delinquency Rates
2007-33 :: With Furlong and Krainer :: November 2007
We evaluate the importance of three different channels for explaining the recent performance of subprime mortgages. First, the riskiness of the subprime borrowing pool may have increased. Second, pockets of regional economic weakness may have helped
push a larger proportion of subprime borrowers into delinquency. Third, for a variety of reasons, the recent history of local house price appreciation and the degree of house price deceleration may have affected delinquency rates on subprime mortgages. While we find
a role for all three candidate explanations, patterns in recent house price appreciation are far and away the best single predictor of delinquency levels and changes in delinquencies. Importantly, after controlling for the current level of house price appreciation, measures
of house price deceleration remain significant predictors of changes in subprime delinquencies. The results point to a possible role for changes in house price expectations for explaining changes in delinquencies.
Innovations in Mortgage Markets and Increased Spending on Housing
2007-05 :: With Krainer :: July 2007
Innovations in the mortgage market since the mid-1990s have effectively reduced a number of financing constraints. Coinciding with these innovations, we document a significant change in the propensity for households to own their homes, as well as substantial increases in the
share of household income devoted to housing. These changes in housing expenditures are especially large for those groups that faced the greatest financial constraints, and are robust across the changing composition of households and their geographic location. We present evidence that young, constrained households may have used newly designed mortgages to
finance their increased expenditures on housing.
Endogenous Skill Bias in Technology Adoption: City-Level Evidence from the IT Revolution
2006-24 :: With Beaudry and Lewis :: August 2006
This paper focuses on the bi-directional interaction between technology adoption and labor market conditions. We examine cross-city differences in PC adoption, relative wages, and changes in relative wages over the period 1980-2000 to evaluate whether the patterns conform to the predictions of a neoclassical model of endogenous technology adoption. Our approach melds the literature on the effect of the relative supply of skilled labor on technology adoption to the often distinct literature on how technological change influences the relative demand for skilled labor. Our results support the idea that differences in technology use across cities and its effects on wages reflect an equilibrium response to local factor supply conditions. The
model and data suggest that cities initially endowed with relatively abundant and cheap skilled labor adopted PCs more aggressively than cities with relatively expensive skilled labor, causing returns to skill to increase most in cities that adopted PCs most intensively. Our findings indicate that neoclassical models of endogenous technology adoption can be
very useful for understanding where technological change arises and how it affects markets.
Labor Supply and Personal Computer Adoption
2006-18 :: With Lewis :: June 2006
The positive correlations found between computer use and human capital are often interpreted as evidence that the adoption of computers have raised the relative demand for skilled labor, the widely touted skill-biased technological change hypothesis. However, several models argue the skill-intensity of technology is endogenously determined by the relative supply of
skilled labor. We use instruments for the supply of human capital coupled with a rich dataset on computer usage by businesses to show that the supply of human capital is an important determinant of the adoption of personal computers. Our results suggest that great caution must be exercised in placing economic interpretations on the correlations often found between technology and human capital.
Consumer Sentiment, the Economy, and the News Media
2004-09 :: With Morin :: July 2004
The news media affects consumers' perceptions of the economy through three channels. First, the news media conveys the latest economic data and the opinions of professionals to consumers. Second, consumers receive a signal about the economy through the tone and volume of economic reporting. Last, the greater the volume of news about the economy, the greater the likelihood that consumers will update their expectations about the economy. We find evidence that all three of these channels affect consumer sentiment. We derive measures of the tone and volume of economic reporting, building upon the R-word index of The Economist. We find that there are periods when reporting on the economy has not been consistent with actual economic events, especially during the early 1990s. As a consequence, there are times during which consumer sentiment is driven away from what economic fundamentals would suggest. We also find evidence supporting that consumers update their expectations about the economy much more frequently during periods of high news coverage than in periods of low news coverage; high news coverage of the economy is concentrated during recessions and immediately after recessions, implying that "stickiness" in expectations is countercyclical. Finally, because the model of consumer sentiment is highly nonlinear, month-tomonth changes in sentiment are difficult to interpret. For instance, although an increase in the number of articles that mention "recession" typically is associated with a decline in sentiment, under certain conditions it can actually result in an increase in various sentiment indexes.
When Do Matched-Model and Hedonic Techniques Yield Similar Price Measures?
Forthcoming in SSHRC International Conference on Index Number Theory and the Measurement of Prices and Productivity: Conference volume :: With Aizcorbe and Corrado
Communications Equipment: What Has Happened to Prices?
Forthcoming in Measuring Capital in the New Economy, NBER/ CRIW. Chicago: University of Chicago Press
This paper examines the prices for communications equipment, an important component of information technology. Unlike prices for computers, which officially fall sharply every year, the official prices for communications equipment have barely budged over the past decade. This paper combines earlier work on prices for several segments of communications equipment with new results for public exchanges, fiber-optic equipment, and modems. The results suggest that prices for communications equipment fall much faster than official statistics would indicate, but not as fast as computers. The results presented in this paper, if incorporated into the National Income and Product Accounts, would decrease multifactor productivity growth by about 0.1 percentage point per year and increase the contribution of capital deepening by a like amount. Also, GDP growth would be boosted marginally.
Prices for Local Area Network Equipment
Information Economics and Policy 17(3), July 2005, 365-388 :: With Forman
In this paper we examine quality-adjusted prices for local area network
(LAN) equipment. Hedonic regressions are used to estimate price changes
for the two largest classes of LAN equipment, routers and switches. A
matched model was used for LAN cards, and the prices for hubs were inferred by using an economic relationship to switches. Overall, we find that prices for the four groups of LAN equipment fell at a 17 percent annual rate between 1995 and 2000. These results stand in sharp contrast to the producer price index for communications equipment that is nearly flat over the 1990s.
Review of "Technology, Growth, and the Labor Market"
Journal of Economic Literature, June 2005
Information Technology Investment and Firm Performance in U.S. Retail Trade
Economics of Innovation and New Technology 13(7), October 2004, 595-614 :: With Jarmin and Klimek
We examine the relationship between investments in information technology
(IT) and retail firm performance. We use untapped firm and establishment
micro data from the Censuses of Retail Trade and the Assets and
Expenditures Survey. We show that large firms account for most retail IT
investment, employment, and establishment growth. We find evidence of a
significant relationship between IT investment intensity and productivity
How Fast Do Personal Computers Depreciate? Concepts and New Estimates
In NBER: Tax Policy and the Economy, 18, ed. by Poterba :: Cambridge, MA: MIT Press, 2004. 37-79 :: With Dunn, Oliner, and Sichel
This paper provides new estimates of depreciation rates for personal computers (PCs) using an extensive database on prices of used PCs. Our results show that PCs lose roughly half their remaining value, on average, with each additional year of use. We decompose that decline into age-related depreciation and a revaluation effect, where the latter effect is driven by the steep ongoing drop in the constant-quality prices of newly introduced PCs. Our results are directly applicable for measuring the depreciation of PCs in the National Income and Product Accounts (NIPA) and were incorporated into the December 2003 comprehensive NIPA revision. Regarding tax policy, our estimates suggest that the current tax depreciation schedule for PCs is about right in a zero-inflation environment. However, because the tax code is not indexed for inflation, the tax allowances would be too small in present value for inflation rates above the very low level now prevailing.
Understanding Productivity: Lessons from Longitudinal Microdata
Journal of Economic Literature 38(3), September 2000, 569-594 :: With Bartelsman
The Role of Technology Use in the Survival and Growth of Manufacturing Plants
In Innovation, Evolution of Industry and Economic Growth: The International Library of Critical Writings in Economics, ed. by Audretsch and Klepperer, series ed. Blaug, 2000 :: With Dunne and Roberts
Capital Adjustment Patterns in Manufacturing Plants
Review of Economic Dynamics 1(2), April 1998, 409-429 :: With Dunne
The Effect of Technology Use on Productivity Growth
Economics of Innovation and New Technology 7(1), 1998, 1-26 :: With McGuckin and Streitwieser
Productivity, Skill, and Wage Effects of Multinational Corporations in the United States
In Foreign Ownership and the Consequences of Direct Investment in the United States: Beyond Us and Them :: Nigh Westport, CT: Quorum Books, 1998 :: With Jensen
Workers, Wages, and Technology
Quarterly Journal of Economics 112(1), February 1997, 253-290 :: With Dunne and Troske
Estimating Capital Efficiency Schedules within Production Functions
Economic Inquiry 34(1), January 1996, 78-92
The Role of Technology Use in the Survival and Growth of Manufacturing Plants
International Journal of Industrial Organization 13(4), December 1995, 523-542 :: With Dunne and Roberts
Energy Intensity, Electricity Consumption, and Advanced Manufacturing Technology Usage
Technological Forecasting and Social Change, October 1995 :: With Dunne
The Outlook for Productivity Growth: Symposium Summary
Economic Letter 2009-11 :: March 20, 2009
Regional Growth and Resilience: Evidence from Urban Growth Centers
Economic Review :: 2009 :: With Gerst and Daly
Summer Reading: New Research in Applied Microeconomics Conference Summary
Economic Letter 2008-27 :: September 5, 2008
The Narrowing of the Male-Female Wage Gap
Economic Letter 2007-17 :: June 29, 2007 :: With Lewis
House Prices and Subprime Mortgage Delinquencies
Economic Letter 2007-14 :: June 8, 2007 :: With Furlong and Krainer
Financial Innovations and the Real Economy: Conference Summary
Economic Letter 2007-05 :: March 2, 2007 :: With Fernald and Lopez
The Rise in Homeownership
Economic Letter 2006-30 :: November 3, 2006 :: With Motika
Property Debt Burdens
Economic Letter 2006-18 :: July 28, 2006 :: With Motika
The Diffusion of Personal Computers across the U.S.
Economic Letter 2005-37 :: December 23, 2005
IT Investment: Will the Glory Days Ever Return?
Economic Letter 2005-13 :: June 17, 2005
Productivity Growth and the Retail Sector
Economic Letter 2004-37 :: December 17, 2004
Consumer Sentiment and the Media
Economic Letter 2004-29 :: October 22, 2004
The Boom and the Bust in Information Technology Investment
Economic Review :: 2004
The Bay Area Economy: Down but Not Out
Economic Letter 2003-33 :: November 7, 2003 :: With Daly