Academic Work

Working Papers:

Shopping for Lower Sales Tax Rates  (with Lorenz Kueng and Stephanie Johnson) (Online Appendix)
Abstract: Using comprehensive high-frequency state and local sales tax data, we show that household spending responds strongly to changes in sales tax rates. Even though sales taxes are not observed in posted prices and have a wide range of rates and exemptions, households adjust in many dimensions, stocking up on storable goods before taxes rise and increasing online and cross-border shopping. Interestingly, households adjust spending similarly on both taxable and tax-exempt goods. We build an inventory model of shopping behavior and demonstrate that this seemingly irrational behavior is optimal in the presence of fixed costs of shopping trips and provide empirical evidence in favor of this new mechanism. While our results demonstrate that salience of sales tax changes is high on average, we also show that upcoming tax changes that are more salient prompt larger responses.

Expectation Formation Following Large Unexpected Shocks (with Xuguang Sheng and Tucker McElroy)
Abstract: By matching a large database of individual forecaster data with the universe of sizable natural disasters across 54 countries, we identify a set of new stylized facts: (i) forecasters are persistently heterogeneous in how often they issue or revise a forecast; (ii) information rigidity declines significantly following large, unexpected natural disaster shocks; (iii) the response of forecast disagreement displays interesting patterns: attentive forecasters tend to move away from the previous consensus following a disaster while the opposite is true for inattentive forecasters. We develop a learning model that captures the two channels through which natural disaster shocks affect expectation formation: attention effect { the visibly large shocks induce immediate and synchronized updating of information for inattentive agents, and uncertainty effect { the occurrence of those shocks generates increased uncertainty among attentive agents.

Does Uncertainty Reduce Growth? Using Disasters as Natural Experiments (with Nick Bloom and Stephen Terry) (Figures)
Abstract: Uncertainty, as measured by stock market or exchange rate volatility, seems to jump after unexpected events such as coups, major natural disasters, or the onset of war. We use a panel of these unexpected shocks across 60 countries to evaluate the impact of uncertainty, or second moment shocks, on economic growth. Using both instrumental variables and a vector autoregression approaches to estimate the effect of first and second moment shocks on future economic growth. We find results consistent with earlier work focusing on the United States, with second moment shocks playing an important role in the business cycle . We find larger impacts of second moment shocks among poorer countries relative to rich ones, suggesting a larger role of uncertainty in growth prospects among this group.

Effects of the 1986 Immigration Reform and Control Act on Crime
Abstract: In the late 1970's, rates of illegal immigration into the United States increased dramatically. This increase led to pressure on the federal government to find some way of dealing with the immigrants, culminating in the 1986 Immigration Reform and Control Act (IRCA). This paper seeks to examine the effects that the 1986 IRCA, which legalized over 2.5 million illegal aliens, had on the commission of crime in the United States. We find evidence that IRCA applicants are associated with higher crime rates prior to legalization and that, subsequent to legalization, this association disappears. We find drops in crime of approximately 1%-4% associated with one percent of the population being legalized, primarily due to a drop in property crimes. This fall in crime is equivalent to 80,000-320,000 fewer crimes  committed each year due to legalization. Finally, we calibrate a labor market model of crime using empirical wage and employment data and .find that much of the drop in crime can be attributed to greater job market opportunities among those legalized by the IRCA.

Elasticity of Household Retailer Choice (with Brian Baugh and Lorenz Kueng)
Abstract: Using transaction-level income and spending data, we demonstrate that households are highly elastic in their choice of individual retailers. For instance, about 30% of short-term marginal spending is done at retailers that the household has never patronized before. The degree of elasticity is asymmetric and varies by industry, size of the firms, characteristics of the customer base, location, and whether a firm is public or private. Because these retailers are not identical, household retailer choice can drive important aggregate trends. We show that the elasticity of household retailer choice has implications not only for entrepreneurship and firm-level competition, but can affect trends in aggregate cash-flow volatility, firm size, profitability, and labor intensity. Moreover, retailer choice is highly dispersed at a household level, with little overlap in retailers across individual households. Most of this dispersion is driven by location and household demographics and not by household income.

Work in Progress:

"The Limits of Imputing Consumption" with Lorenz Kueng, Steffen Meyer, and Michaela Pagel

"Household Consumption and Consumer Payment Choice" with David Berger and Kyle Herkenhof

"What Triggers Stock Market Jumps?" with Nick Bloom, Steve Davis, and Marco Sammon

Published and Forthcoming Work:

"Debt and the Consumption Response to Household Income ShocksForthcoming, Journal of Political Economy

"The Impact of Unemployment Insurance on Job Search: Evidence from Google Search Data" (with Andrey Fradkin) Review of Economics and Statistics December 2017 99:5756-768

"Income Changes and Consumption: Evidence from the 2013 Federal Government Shutdown" (with Constantine Yannelis) Review of Economic Dynamics, January 2017.

"Measuring Economic Policy Uncertainty
(with Nick Bloom and Steve Davis) Quarterly Journal of Economics, November 2016. (WebsiteFigures; Data)

"Effects of Immigrant Legalization on Crime" American Economic Review P&P, 105(5): 210-13. 2015.

"Why Has US Policy Uncertainty Risen since 1960?(with Nicholas Bloom, Brandice Canes-Wrone, Steven J. Davis, and Jonathan Rodden) American Economic Review P&P, 104(5): 56-602014.

Other Work (Resting Papers):

Congressmen's Political Power and Federal Contracting in their Districts (with Roy Mill
Abstract: We use data on all US federally awarded contracts since 2002 to measure how the relative power of Congressmen affects the amount of money sent to their districts, controlling for time-invariant individual characteristics and national trends. We find that political power and opportunity, strategic behavior, ideology, and committee membership all play important roles in the allocation of federal contract dollars across congressional districts. We score representatives' campaign contributions according to how local their donors base is. We break down the effect of power changes by the measure of how local Representatives are, and find that Representatives who are more locally focused in terms of their campaign contributions leverage increases in political power or political circumstance in order to increase allocations of federal contracts to their districts 

Effects of Legal Status and Health Service Availability on Mortality
Abstract: Using a straight-forward Differences-in-Differences approach, effects of the 1986 Immigration Reform and Control Act and the 1986 and 1987 Omnibus Budget Reconciliation Acts on mortality levels in California are examined. These acts had the effect of legalizing and granting healthcare coverage to millions of previously illegal immigrants. Utilizing data on all IRCA applicants and all California deaths within this time period, I find evidence of substantial declines in mortality correlated with the size of the legalized cohort by county. If we assume, for purposes of a back of the envelope calculation, that after the reform IRCA applicants' mortality rate is approximately equal to that of demographically similar California residents, this finding is consistent with IRCA applicants being subject to five to six times the mortality rate of California residents prior to the reform.