Macroeconomics

This paper presents an econometric analysis of the effect of changes in the quantity and type of pharmaceuticals prescribed by physicians in outpatient visits on rates of hospitalization, surgical procedure, mortality, and related variables. It examines the statistical relationship across diseases between changes in outpatient pharmaceutical utilization and changes in inpatient care utilization and mortality during the period 1980-92.

Examines the effectiveness of incentives to promote household saving in the United States. Individual retirement accounts; 401(k) plans; Cost-benefit approach to saving incentives; Welfare-theoretic approach to saving incentives.

Micro data studies of household saving often find a significant group in the population with virtually no wealth, raising concerns about heterogeneity in motives for saving. In particular, this heterogeneity has been interpreted as evidence against the life cycle model of saving. This paper argues that a life cycle model can replicate observed patterns in household wealth accumulation after accounting explicitly for precautionary saving and asset-based, means-tested social insurance.

We improve upon existing approaches used to estimate investment models by exploiting tax reforms as "natural experiments." we find that tax policy has an economically important effect through the user cost of capital on firms' equipment investment following major tax reforms enacted in 1962, 1971, 1981, and 1986. This effect is most pronounced for firms not in tax loss positions and, thus, more likely to face statutory tax rates and investment incentives.

This paper examines predictions of a life-cycle simulation model—in which individuals face uncertainty regarding their length of life, earnings, and out-of-pocket medical expenditures, and imperfect insurance and lending markets—for individual and aggregate wealth accumulation. Relative to life-cycle or buffer-stock alternatives, our augmented life-cycle model better matches a variety of features of U.S.

In this paper, the author outlines what he believes to be causes of why many people do not save. Much of the research examining levels of consumption, saving, and wealth, as well as their responsiveness to policy, has been done using a life-cycle model with the simplifying assumption of perfect certainty. More recently, a line of inquiry has examined the effects of uncertainty on saving, generally in the context of highly stylized models. This research has shown that, in these models, uninsured earnings uncertainty can alter optimal saving behavior in a variety of important ways.

We examine associations between accounting measures of earnings and stock returns in Japan over varying window lengths and compare them to those for the United States. Our results are consistent with the view that Japanese investors utilize less accounting information in their pricing of equities than do their U.S. counterparts. This was particularly evident in the 'boom' period of the mid to late 1980s when the fundamental values conveyed by accounting measures appear to have been largely ignored.

The article focuses on investment behavior using tax reforms as natural experiments. Economists and policymakers have long been interested in measuring the effects of changes in the returns to and costs of business fixed investment. That interest reflects both theoretical and practical concerns which have stimulated a large body of empirical research using aggregate and micro-level data. This literature has reached few unambiguous conclusions.