Breaking the Cycle: How the News and Markets Created a Negative Feedback Loop in COVID-19
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
New research from CBS Professor Harry Mamaysky reveals how negativity in the news and markets can escalate a financial crisis.
Adapted from “Global Value Chains in Developing Countries: A Relational Perspective from Coffee and Garments,” by Laura Boudreau of Columbia Business School, Julia Cajal Grossi of the Geneva Graduate Institute, and Rocco Macchiavello of the London School of Economics.
Adapted from “Online Advertising as Passive Search,” by Raluca M. Ursu of New York University Stern School of Business, Andrey Simonov of Columbia Business School, and Eunkyung An of New York University Stern School of Business.
This paper from Columbia Business School, “Meaning of Manual Labor Impedes Consumer Adoption of Autonomous Products,” explores marketing solutions to some consumers’ resistance towards autonomous products. The study was co-authored by Emanuel de Bellis of the University of St. Gallen, Gita Johar of Columbia Business School, and Nicola Poletti of Cada.
Co-authored by John B. Donaldson of Columbia Business School, “The Macroeconomics of Stakeholder Equilibria,” proposes a model for a purely private, mutually beneficial financial agreement between worker and firm that keeps decision-making in the hands of stockholders while improving the employment contract for employees.
At Columbia Business School, our faculty members are at the forefront of research in their respective fields, offering innovative ideas that directly impact the practice of business today. A quick glance at our publication on faculty research, CBS Insights, will give you a sense of the breadth and immediacy of the insight our professors provide.
As a student at the School, this will greatly enrich your education. In Columbia classrooms, you are at the cutting-edge of industry, studying the practices that others will later adopt and teach. As any business leader will tell you, in a competitive environment, being first puts you at a distinct advantage over your peers. Learn economic development from Ray Fisman, the Lambert Family Professor of Social Enterprise and a rising star in the field, or real estate from Chris Mayer, the Paul Milstein Professor of Real Estate, a renowned expert and frequent commentator on complex housing issues. This way, when you complete your degree, you'll be set up to succeed.
Columbia Business School in conjunction with the Office of the Dean provides its faculty, PhD students, and other research staff with resources and cutting edge tools and technology to help push the boundaries of business research.
Specifically, our goal is to seamlessly help faculty set up and execute their research programs. This includes, but is not limited to:
All these activities help to facilitate and streamline faculty research, and that of the doctoral students working with them.
Clinical studies have shown that the use of certain drugs can reduce disability. Access to prescription drugs varies across countries. Even when the total number of drugs launched in two countries is similar, the specific drugs that were launched, and the diseases those drugs are used to treat, may differ.
There are two types of prescription drug cost offsets. The first type of cost offset—from prescription drug use—is primarily about the effect of changes in drug quantity (e.g. due to changes in out-of-pocket drug costs) on other medical costs. The second type of cost offset—the cost offset from prescription drug innovation—is primarily about the effect of prescription drug quality on other medical costs.
We develop a theory of optimal government debt in which publicly-issued and privately-issued safe assets are substitutes. While government bonds are backed by future tax revenues, privately-issued safe assets are backed by the future repayment of pools of defaultable private loans. We find that a higher supply of public debt crowds out privately-issued safe assets less than one for one and reduces the interest spread between borrowing and deposit rates.
The completion of the Human Genome Project was heralded as a step towards “personalized medicine,” offering patients individualized treatments based on genomic profiling. More recently, this vision has been eclipsed by the promise of “precision medicine” (PM), emphasizing benefits to patients from more precise diagnosis and treatment based on a range of biomarkers, along with data about patients’ environment, lifestyle, and behaviors.
Over the past four decades, government debt as a fraction of GDP has been on an upward trajectory in advanced economies, approaching levels not reached since World War II. While normative macroeconomic theories can explain the increase in the level of debt in certain periods as a response to macroeconomic shocks, they cannot explain the broad-based long-run trend in debt accumulation. In contrast, political economy theories can explain the long-run trend as resulting from an aging population, rising political polarization, and rising electoral uncertainty across advanced economies.
Selecting more productive employees among a pool of job applicants can be a cost-effective means of improving organizational performance and may be particularly important in the public sector. We study the relationship among applicant characteristics, hiring outcomes, and job performance for teachers in the Washington DC Public Schools. Applicants' academic background (e.g., undergraduate GPA) is essentially uncorrelated with hiring.
This article provides evidence about the impact that public and private research had on premature mortality and hospitalization due to cancer in the United States during the period 1999-2013. We estimate difference-in-differences models based on longitudinal, cancer-site-level data to determine whether the cancer sites about which more research-supported articles were published had larger subsequent reductions in premature mortality and hospitalization during the period 1999 to 2013, controlling for the change in the number of people diagnosed.
This study provides econometric evidence about the impact that new chemical entity (NCE) launches had on premature mortality from 17 diseases in 9 Middle Eastern and African countries during the period 2007–2015.
The greater the relative number of NCEs for a disease launched in a country, the greater the subsequent relative decline in premature mortality from that disease, controlling for the average rate of mortality decline in each country and from each disease.
Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules, chosen jointly by a group of countries, to uncoordinated rules. If governments' present bias is small, coordinated rules are tighter than uncoordinated rules: individual countries do not internalize the redistributive effect of interest rates. However, if the bias is large, coordinated rules are slacker: countries do not internalize the disciplining effect of interest rates.
This study employs a two-way fixed effects research design to measure the mortality impact and cost-effectiveness of cancer drugs: It analyzes the correlation across 36 countries between the relative mortality from 19 types of cancer in 2015 and the relative number of drugs previously launched in that country to treat that type of cancer, controlling for relative incidence.
Assessment of the impact that pharmaceutical innovation (the Russian launch of new cancer drugs) and cancer incidence had on cancer mortality in Russia during the period 2001–2011.
Investigation of whether the decline in mortality was greater for cancer sites (breast, lung, colon, etc.) subject to more pharmaceutical innovation and greater declines in incidence.
I study a single-agent sequential search problem as in Weitzman. Contrary to Weitzman, conditional on stopping, the agent may take any uninspected box without first inspecting its contents. This introduces a new trade-off. By taking a box without inspection, the agent saves on its inspection costs. However, by inspecting it, he may discover that its contents are lower than he anticipated. I identify sufficient conditions on the parameters of the environment under which I characterize the optimal policy.
This paper documents how life cycle wage growth varies across countries. We harmonize repeated cross-sectional surveys from a set of countries of all income levels and then measure how wages rise with potential experience. Our main finding is that experience-wage profiles are on average twice as steep in rich countries as in poor countries. In addition, more educated workers have steeper profiles than the less educated; this accounts for around one-third of cross-country differences in aggregate profiles.
We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity pay premium.
This pilot study estimates the effects of family structure on age of diagnosis, with the goal of identifying factors that may accelerate or delay diagnosis. We conducted an online survey with 477 parents of children with autism. In addition, we carried out novel, follow-up surveys of 196 "friends and family," who were referred by parents. Family structure and frequency of interactions with family members have significant effects on age of diagnosis (p < 0.05).
This paper assesses cross-country variation in life-cycle human capital accumulation, using new evidence from US immigrants. The returns to experience accumulated in an immigrant's birth country before migrating are positively correlated with birth-country GDP per capita. To understand this fact, we build a model of life-cycle human capital accumulation that features three potential theories: differential human capital accumulation, differential selection, and differential skill loss.
This paper provides quasi-experimental evidence on the impact of paid leave legislation on fathers' leave-taking, as well as on the division of leave between mothers and fathers in dual-earner households. Using difference-in-difference and difference-in-difference-in-difference designs, we study California's Paid Family Leave (CA-PFL) program, which is the first source of government-provided paid parental leave available to fathers in the United States.
We quantify the difference in the convenience yield of U.S. Treasuries and government bonds of other developed countries by measuring the deviation from covered interest parity between government bond yields. We call this wedge the "U.S. Treasury Premium." We document a secular decline in the U.S. Treasury Premium at medium to long maturities. The five-year U.S. Treasury Premium averages approximately 21 basis points prior to the Global Financial Crisis, increases up to 90 basis points during the crisis, and has disappeared after the crisis with the post-crisis mean at -8 basis points.
We examine the Internet’s impact on the cross-border distribution of cultural goods and assess its implications for cultural policy and cultural diversity. We present a stylized model of a two-country economy where governments are endowed with political preferences over the consumption of domestic content and enact import barriers and subsidies to protect it. We introduce peer-to-peer file sharing as a distinct distribution channel enabled by the Internet that provides access to all media products at a low cost. We report two main findings.
I assess the impact that pharmaceutical innovation had on cancer mortality in Mexico during the period 2003–2013, by investigating whether there were larger declines in the age-standardized mortality rate of cancer sites (breast, lung, colon, etc.) that were subject to more pharmaceutical innovation, controlling for changes in the age-standardized cancer incidence rate. The estimates indicate that new drugs launched during 1991–2001 reduced the age-standardized cancer mortality rate by 16%, i.e., at an average annual rate of about 1.6%.
We estimate the causal effect of sovereign default on the equity returns of Argentine firms. We identify this effect by exploiting changes in the probability of Argentine sovereign default induced by legal rulings in the case of Republic of Argentina v. NML Capital. We find that a 10 percent increase in the probability of default causes a 6 percent decline in the value of Argentine equities and a 1 percent depreciation of a measure of the exchange rate. We examine the channels through which a sovereign default may affect the economy.
The article shows that outside ownership of media moves in stages -- from media properties as the mouthpiece for personal and business interests, to a second stage of conglomerates seeking economic “synergies” of performance, to a third stage dominated by financial portfolio diversification. These phases of outside media ownership correspond to the stages of economic development in that country.The article finds that in rich countries, the ownership of media by industrial companies as a way to create political influence has been declining.
I analyse the effect that pharmaceutical innovation had on premature (before age 75 and 80) mortality from all diseases in Australia during the period 1998–2011 by investigating whether the diseases that experienced more pharmaceutical innovation had larger declines in premature mortality. My estimates indicate that 60 per cent of the 1998–2011 decline in premature (before age 75) mortality was due to previous pharmaceutical innovation.
Using data from North Carolina, Jesse Rothstein (2017) presents a comprehensive replication of Chetty, Friedman, and Rockoff's [CFR] (2014a,b) results on teachers' impacts. In addition, Rothstein presents new evidence that he argues raises concerns about three aspects of CFR's methods and identication assumptions: their treatment of missing data, the validity of their quasi-experimental design, and their method of controlling for observables when estimating teachers' long-term effects.
Previous research investigating the impact of pharmaceutical innovation in Turkey has shown that the use of newer drugs increased mean age at death by approximately 3 years during the period 1999-2008 and reduced the number of hospital days by approximately 1% per year during the period 2007-2010.
To align employees' interests with the firm's goals, employers often use performance-based pay, but designing such a compensation plan is challenging because performance is typically multifaceted. For example, a sales employee should be incentivized to sell the company's product, but a focus on current sales without rewarding the salespeople according to the quality of the product and/or customer service may result in fewer future sales.
What are the sources of the returns to education? We study the allocation of higher education graduates from public institutions in Ohio across firms. We present three results. First, we confirm findings in the earlier literature of large pay differences across degrees. Second, we show that up to one quarter of pay premiums for higher degrees are explained by between-firm pay differences. Third, higher education degrees are associated with greater representation at the best-paying firms.
This paper proposes an institutional solution that can help unlock the flow of low yielding long-term savings towards high-return infrastructure investments. The solution is to transform public–private partnerships (PPPs) in infrastructure as well as the classic model of multilateral development banks. Instead of thinking of PPPs as bilateral contracts between a private concession operator and a government agency, we argue that they should be conceived as partnerships that also involve a development bank and long-term institutional investors as partners.
Principals often operate on misspecified models of their agents' preferences. When preferences are such that non-local incentive constraints may bind in the optimum, even slight misspecification of the preferences can lead to large and non-vanishing losses. Instead, we propose a two-step scheme whereby the principal: (1) identifies the model-optimal menu; and (2) modifies prices by offering to share with the agent a fixed proportion of the profit she would receive if an item were sold at the model-optimal price.
We consider the implications for optimal fiscal policy when taxes are non-distortionary and households are heterogeneous and borrowing constrained. The main result is that optimal policy keeps some households borrowing constrained in order to reduce interest rates on government debt.
The factors that combined to help elect the new US president have the internet as a common denominator, reckons – and these factors are now inherent in an internet-based economy and society
We study an international law firm that changed its compensation plan for team leaders to address a multitasking problem: team leaders were focusing their effort on billable hours and not spending sufficient time on "leadership" activities to build the firm. Compensation was changed to provide greater incentives for the leadership activities and weaker incentives for billable hours. The effect of this change on the task allocation of the firm's team leaders is large and robust; team leaders increase their non-billable hours and shift billable hours to team members.
This article develops a model of optimal government debt maturity in which the government cannot issue state-contingent bonds and cannot commit to fiscal policy. If the government can perfectly commit, it fully insulates the economy against government spending shocks by purchasing short-term assets and issuing long-term debt. These positions are quantitatively very large relative to GDP and do not need to be actively managed by the government. Our main result is that these conclusions are not robust to the introduction of lack of commitment.
This article investigates the cost and feasibility of reducing U.S. greenhouse gas emissions by 80 percent from 2005 levels by 2050. The United States has stated in its Paris Conference of the Parties (COP) 21 submission that this is its aspiration. I suggest that this goal can be reached at a net cost in the range of $37 to $135 billion/year. I assume that the goal is to be reached by extensive use of solar photovoltaic and wind energy (66 percent of generating capacity), in which case the cost of energy storage will play a key role in the overall cost.
We present a novel theory of the employment relationship. A manager can invest in attention technology to recognize good worker performance. The technology may break and is costly to replace. We show that as time passes without recognition, the worker's belief about the manager's technology worsens and his effort declines. The manager responds by investing, but this investment is insufficient to stop the decline in effort and eventually becomes decreasing. The relationship, therefore, continues deteriorating, and a return to high performance becomes increasingly unlikely.
The premature cancer mortality rate has been declining in Switzerland, but there has been considerable variation in the rate of decline across cancer sites (e.g., breast or digestive organs). I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Switzerland during the period 1995-2012 by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger declines in premature mortality, controlling for the number of people diagnosed and mean age at diagnosis.
In a single commodity setting with changing tastes, an individual's consumption plan can be obtained using naive or sophisticated choice. We provide two sufficient conditions for when (i) the solutions are unique and agree and (ii) the common plan is representable by a non-changing tastes utility. Because the solution is not revised over time, the plan and associated preferences are referred to as being effectively consistent. Afriat-style revealed preference tests are derived.
Cancer mortality declined in Belgium during the period 2004–2012, but there was considerable variation in the rate of decline across cancer sites (breast, lung, etc.). I analyze the effect that pharmaceutical innovation had on cancer mortality in Belgium, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger subsequent declines in mortality, controlling for changes in cancer incidence. The measures of mortality analyzed – premature (before ages 75 and 65) mortality rates and mean age at death – are not subject to lead-time bias.
We introduce a new measure of emerging market sovereign credit risk: the local currency credit spread, defined as the spread of local currency bonds over the synthetic local currency risk-free rate constructed using cross-currency swaps. We find that local currency credit spreads are positive and sizable. Compared with credit spreads on foreign-currency-denominated debt, local currency credit spreads have lower means, lower cross-country correlations, and lower sensitivity to global risk factors.
This paper studies optimal communication flows in organizations. A production process can be coordinated ex ante, by letting agents stick to a prespecified plan of action. Alternatively, agents may adapt to task-specific shocks, in which case tasks must be coordinated ex post, using communication. When attention is scarce, an optimal organization coordinates only a few tasks ex post. Those tasks are higher performing, more adaptive to the environment, and influential. Hence, scarce attention requires setting priorities, not just local optimization.
Individuals that consume different baskets of goods are differentially affected by relative price changes caused by international trade. We develop a methodology to measure the unequal gains from trade across consumers within countries. The approach requires data on aggregate expenditures and parameters estimated from a non-homothetic gravity equation. We find that trade typically favors the poor, who concentrate spending in more traded sectors.
This paper examines how prices, markups and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approach does not require assumptions on the market structure or demand curves faced by firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups.
This paper investigates financial attention using novel panel data on daily investor online account logins. We find support for selective attention to portfolio information. Account logins fall by 9.5% after market declines. Investors also pay less attention when the VIX volatility index is high. The level of attention and the attention/return correlation are strongly related to investor demographics (gender, age) and financial position (wealth, holdings). Using a new statistical decomposition, we show how aggregate and individual household trading are related to investor attention.
Delegation is a central feature of organizational design that theory suggests should be aligned with the intensity of incentives. We explore a specific form of delegation, namely price delegation, whereby firms allow sales people to offer a maximum discount from the list price to their customers. We develop a model of the price delegation decision based on information acquisition that relies on characteristics of our empirical context of industrial sales.
An Expected Utility maximizer can be risk neutral over a set of non-degenerate multivariate distributions even though her NM (von Neumann Morgenstern) index is not linear. We provide necessary and sufficient conditions for an individual with a concave NM utility to exhibit risk neutral behavior and characterize the regions of the choice space over which risk neutrality is exhibited. The least concave decomposition of the NM index introduced by Debreu [3] plays an important role in our analysis as do the notions of minimum concavity points and minimum concavity directions.
People choose where to live and how much to invest in housing. Traditionally, the first decision has been the domain of spatial economics, while the second has been analyzed in finance. Spatial asset pricing is an attempt to combine equilibrium concepts from both disciplines. In the finance context, we show how spatial decisions can be framed as an expanded portfolio problem. Within spatial economics, we identify the consequences of hedging motives for location decisions.
The premature cancer mortality rate has been declining in Canada, but there has been considerable variation in the rate of decline across cancer sites. I analyze the effect that pharmaceutical innovation had on premature cancer mortality in Canada during the period 2000-2011, by investigating whether the cancer sites that experienced more pharmaceutical innovation had larger declines in the premature mortality rate, controlling for changes in the incidence rate.
This article reviews the literature on teacher value-added. Although value-added models have been used to measure the contributions of numerous inputs to educational production, their application toward identifying the contributions of individual teachers has been particularly contentious. Our review covers articles on topics ranging from technical aspects of model design to the role that value-added can play in informing teacher evaluations in practice, highlighting areas of consensus and disagreement in the literature.
Longitudinal, disease-level data are used to analyze the impact of pharmaceutical innovation on longevity (mean age at death), hospital utilization, and medical expenditure in Greece during the period 1995–2010. The estimates indicate that pharmaceutical innovation increased mean age at death by 0.87 years (10.4 months) – about 44% of the total increase in longevity – and that diseases with larger increases in the cumulative number of drugs launched one to four years earlier had smaller increases in the number of hospital days.
We study the information flows that arise among a set of agents with local knowledge and directed payoff interactions, which differ among pairs of agents. First, we study the equilibrium of a game where, before making decisions, agents can invest in pairwise active communication (speaking) and pairwise passive communication (listening). This leads to a full characterization of information and influence flows.