The aim of the Brookings Papers on Economic Activity (BPEA) is to commission and publish groundbreaking economics research that relates to current challenges in public policy.
Since the journal’s start in 1970, 20 BPEA authors have been awarded the Nobel Prize in economics for their contribution to the field. In recent years alone, major findings have changed how we thinking about the student loans “crisis,” what we know about nationwide variations in health care costs, and characteristics of the long-term unemployed. BPEA research has also informed several of the Federal Rerseve’s most discussed tools and processes, including quantitative easing, Operation Twist, and forward guidance.
Below are findings from six recent papers BPEA papers that garnered notable attention for their findings. You can search through all BPEA research from 1970 to present—which remains free and available to the public—using the BPEA search tool.
Spring 2016 Conference
In “Does the United States have a productivity slowdown or a measurement problem?” David Byrne of the Federal Reserve Board of Governors, John G. Fernald of the Federal Reserve Bank of San Francisco, and Marshall B. Reinsdorf of the International Monetary Fund assert that measurement errors have not gotten worse in the data that underlie productivity growth.
Underlying macroeconomic trends—not mismeasurement of IT-related innovations—are responsible for the slowdown in U.S. labor productivity and total factor productivity (TFP) since the early 2000s,
Furthermore, they find that the productivity slowdown hasn’t been concentrated in industries that are traditionally hard to measure. Between 2004-2013, there was a substantial slowdown in well-measured industries, as well as in IT production. According to the research, shifts in the industry composition of the economy also fail to explain the slowdown. Rather, an aggregate, broad-based slowdown across industries appears to be a more important driving factor.
2. The Majority of Recent student loan Borrowers and Defaulters Attend For-Profit and Non-Selective Schools
Fall 2015 Conference
In “A Crisis in Student Loans? How Changes in the Characteristics of Borrowers and the Institutions they Attend Contributed to Rising Loan Defaults,” Adam Looney of the U.S. Department of the Treasury and Stanford’s Constantine Yannelis find that the so-called student loan crisis in the U.S. is largely concentrated among non-traditional borrowers attending for-profit schools and other non-selective institutions, who have relatively weak educational outcomes and difficulty finding jobs after starting to repay their loan.
By 2011, borrowers at for-profit and 2-year institutions represented almost half of student-loan borrowers leaving school and starting to repay loans, and accounted for 70 percent of student loan defaults. In 2000, only 1 of the top 25 schools whose students owed the most federal debt was a for-profit institution, whereas in 2014, 13 were. Borrowers from those 13 schools owed about $109 billion—almost 10 percent of all federal student loans.
Watch David Wessel explain more:
3. The risks of raising interest rates too soon from today’s near-zero levels exceed those of waiting too long
Fall 2015 Conference
In “Risk Management for Monetary Policy Near the Zero Lower Bound,” Federal Reserve Bank of Chicago President Charles Evans, one of the five regional Fed bank presidents with a vote on monetary policy decisions this year, with co-authors Jonas Fisher, Francois Gourio and Spencer Krane, point to the inherent uncertainty in the Fed’s forecasts and argue that the downside of waiting too long to raise rates will be an unwelcome increase in inflation. In contrast, the downside of moving too soon is that Fed may again find itself struggling to revive an economy with interest rates at zero.
The authors develop a theoretical case for “delayed lift-off,” expanding an approach known as “risk management,” which says that the Fed should consider the adverse consequences of policy alternatives and err on the side of avoiding the worst ones.
Watch Justin Wolfers explain more:
Fall 2014 Conference
In “Why Geographic Variation in Health Care Spending Can’t Tell Us Much about the Efficiency or Quality of our Health Care System,” Brookings Senior Fellow and Hutchins Center on Fiscal and Monetary Policy Director Louise Sheiner contends that the geographic variation in health care spending does not provide a useful measure of inefficiency and waste in the system, in contrast to the widely accepted views from the Dartmouth Atlas of Health Care. The findings challenge the oft-cited theory that emulating low Medicare spending areas will significantly reduce health care system waste and inefficiency.
Watch Justin Wolfers explain more:
Spring 2014 Conference
In “Are the Long-Term Unemployed on the Margins of the Labor Market?” Alan B. Krueger, Judd Cramer, and David Cho of Princeton University find that even after finding another job, reemployment does not fully reset the clock for the long-term unemployed, who are frequently jobless again soon after they gain reemployment: Only 11 percent of those who were long-term unemployed in a given month returned to steady, full-time employment a year later.
Learn more here about the status of the long-term unemployed.
Spring 2013 Conference
In “The Missing ‘One-Offs’: The Hidden Supply of High-Achieving, Low-Income Students,” Caroline M. Hoxby of Stanford and Christopher Avery of Harvard find that there are indeed low-income students with SAT and ACT scores and grades that place them in the 10 percent of all students—between 25,000-35,000 of them. They find that there are missed opportunities in both directions: few if any of these students consider selective colleges, and selective colleges in turn miss them because they tend to focus their outreach efforts in major cities whereas many of these low-income, high-achieving students live in non-major urban areas.
Hoxby and Avery analyze data geographically and that the majority (70 percent) of high-achieving students who apply to selective colleges come from but 15 urban areas whereas under half of high-achieving, low-income students come from those urban areas. In other words, many of these students tend to live in counties that had a large number of high-achievers per 17-year-old but not a large number of achievers in absolute terms. For every high-achieving, low-income student who applies, there are 15 high-achieving, high-income students applying to selective colleges.