Michael C. Best
Department of Economics
420 West 118th Street
New York, NY 10027
NBER Program Affiliations:
NBER Affiliation: Faculty Research Fellow
Institutional Affiliation: Columbia University
Information about this author at RePEc
NBER Working Papers and Publications
|August 2018||Estimating the Elasticity of Intertemporal Substitution Using Mortgage Notches|
with James Cloyne, Ethan Ilzetzki, Henrik Kleven: w24948
Using a novel source of quasi-experimental variation in interest rates, we develop a new approach to estimating the Elasticity of Intertemporal Substitution (EIS). In the UK, the mortgage interest rate features discrete jumps – notches – at thresholds for the loan-to-value (LTV) ratio. These notches generate large bunching below the critical LTV thresholds and missing mass above them. We develop a dynamic model that links these empirical moments to the underlying structural EIS. The average EIS is small, around 0.1, and quite homogeneous in the population. This finding is robust to structural assumptions and can allow for uncertainty, a wide range of risk preferences, portfolio reallocation, liquidity constraints, present bias, and optimization frictions. Our findings have implications for...
|April 2017||Individuals and Organizations as Sources of State Effectiveness|
with Jonas Hjort, David Szakonyi: w23350
Policymakers do not implement states’ policies—bureaucrats do. How important are bureaucrats in determining the productivity of the state enterprise? To what extent do the tradeoffs between different policies—and hence optimal policy design—depend on the effectiveness of the bureaucracy tasked with implementation? We investigate these questions in the context of public procurement. Using data on 16 million purchases in Russia during 2011–2016, we first show that over 40 percent of the variation in quality-adjusted prices paid—our measure of performance—is due to the individual bureaucrats and organizations that manage procurement processes. Our estimates imply that ineffective bureaucracies massively reduce public sector output: moving the least effective quartile of procurers to 75th perc...