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The Digest

Reallocation of Global Supply Chains
Article
 The structure of US international trade has undergone a dramatic transformation since 2018 when the US began imposing substantial tariffs targeting Chinese imports. This trade policy shift, combined with pandemic-era supply chain disruptions and subsequent geopolitical tensions, led US firms to reconsider their global sourcing strategies. In An Anatomy of the Great Reallocation in US Supply Chain Trade (NBER Working Paper 34490), Laura Alfaro and Davin...

Are There Predictable Errors in Investor Expectations?
Article
 The accuracy of investor expectations is fundamental to understanding how efficiently financial markets process information. While extensive research has documented deviations from rational expectations in survey data, quantifying the practical importance of these distortions requires a benchmark of objective beliefs against which subjective expectations can be compared. Without such a measure, it is difficult to assess the extent to which investors systematically...

The Reporter

Program Report: Industrial Organization
Article
Author(s): Liran Einav
Researchers in the Industrial Organization (IO) program study consumer and firm behavior, competition, innovation, and government regulation. This report begins with a brief summary of general developments in the last four decades in the range and focus of program members’ research, then discusses specific examples of recent work.When the program was launched in the early 1990s, two developments had profoundly shaped IO research. One was the development of game-theoretic...

The Risks and Rewards of Homeownership
Article
Author(s): Patrick Bayer, Fernando V. Ferreira & Stephen Ross
The US government has long promoted homeownership through subsidies and tax incentives, viewing it as both socially beneficial and a primary pathway to individual wealth accumulation. For the middle class—those in roughly the middle three-fifths of the wealth distribution—housing wealth remains the most important source of financial security and net worth. Homeownership is also widely believed to provide access to better neighborhoods and higher-quality schools. Yet despite...

The Bulletin on Health

Pain Management and the Opioid Epidemic
Article
 Death rates due to drug poisonings began to surge in the US in the mid-1990s, marking the emergence of an epidemic that has persisted for three decades. The health consequences have been stark, with annual deaths exceeding 100,000 since 2021.In Prescription for Disaster: The SSDI Rate, Pain, and Prescribing Practices (NBER Working Paper 34265), William N. Evans and Ethan M. J. Lieber examine characteristics of counties in 1990—prior to the surge—that predict the county...

Spousal Following and Medicare Part D Plan Choice
Article
 When Medicare beneficiaries enroll in Part D, they typically choose from a menu of approximately three dozen private insurance plans that feature different combinations of premiums, copayments, and drug coverage. The optimal plan choice varies across beneficiaries, depending on their prescription drug purchases. Yet, despite the wide array of options, 73 percent of married enrollees choose the same plan as their spouse. Even among couples with observable differences in...

The Bulletin on Entrepreneurship

Underwriting Based on Cash Flow Helps Younger Entrepreneurs Access Credit
Article
Younger entrepreneurs are disadvantaged in small business loan markets because lenders rely heavily on personal credit scores, which favor long histories of repaying debt. In Modernizing Access to Credit for Younger Entrepreneurs: From FICO to Cash Flow (NBER Working Paper 33367), researchers Christopher M. Hair, Sabrina T. Howell, Mark J. Johnson, and Siena Matsumoto document this fact and show that younger entrepreneurs benefit from underwriting that...

The Gig Economy and Entrepreneurship
Article
The rise of platform-based work has transformed labor markets. Nearly 10 million Americans have participated in the gig economy over the past decade. This transformation may have important effects on entrepreneurship by allowing individuals to gain industry experience, encouraging experimentation, and lowering downside risks faced by founders.In Entrepreneurship and the Gig Economy: Evidence from US Tax Returns (NBER Working Paper 33347), researchers Matthew R. Denes, ...