Working Papers

  1. 2015

    A State Level Analysis of Okun’s Law. Guisinger, Amy Y., Rubén Hernández-Murillo, Michael T. Owyang, and Tara M. Sinclair. 2015. Working Paper No. 2015-029A. Federal Reserve Bank of St. Louis. https://research.stlouisfed.org/wp/2015/2015-029.pdf.

    Abstract:

    Okun’s law is an empirical relationship that measures the correlation between the deviation of the unemployment rate from its natural rate and the deviation of output growth from its potential. In this paper, we estimate Okun’s coefficients for each U.S. state and examine the potential factors that explain the heterogeneity of the estimated Okun relationships. We find that indicators of more flexible labor markets (higher levels of education achievement in the population, lower rate of unionization, and a higher share of non-manufacturing employment) are important determinants of the differences in Okun’s coefficient across states. Finally, we show that Okun’s relationship is not stable across specifications, which can lead to inaccurate estimates of the potential determinants of Okun’s coefficient.

    BibTeX entry:

    @techreport{fedlwp2015-029,
      title = {A State Level Analysis of {O}kun's {L}aw},
      author = {Guisinger, Amy Y. and Hern{\'a}ndez-Murillo, Rub{\'e}n and Owyang, Michael T. and Sinclair, Tara M.},
      institution = {Federal Reserve Bank of St. Louis},
      year = {2015},
      number = {No. 2015-029A},
      type = {Working Paper},
      pubtype = {WP},
      url = {https://research.stlouisfed.org/wp/2015/2015-029.pdf}
    }
    

    Links to file:

  2. 2014

    Interjurisdictional Competition and Location Decisions of Firms. Hernández-Murillo, Rubén. 2014. Working Paper No. 2014-036A. Federal Reserve Bank of St. Louis. http://research.stlouisfed.org/wp/2014/2014-036.pdf.

    Abstract:

    We examine the welfare properties of alternative regimes of interjurisdictional competition for heterogeneous mobile firms. Firms differ not only in terms of the degree of mobility across jurisdictions but also in terms of productivity. Alternative taxation regimes represent restraints on the discretionary powers of taxation of local governments. We find that average welfare is higher under discretionary and more efficient taxation regimes (in the sense of minimizing dead-weight losses from distortionary taxation) when firms are highly mobile. In this situation, further limiting competition by imposing a system of non-discretionary instruments can reduce average welfare by reducing the efficiency of the local governments at raising and allocating public funds. When firms face high moving costs, on the other hand, switching to a non-discretionary and less efficient taxation regime may increase welfare by preventing local governments from engaging in excessive redistribution of resources.

    BibTeX entry:

    @techreport{fedlwp2014-036,
      title = {Interjurisdictional Competition and Location Decisions of Firms},
      author = {Hern{\'a}ndez-Murillo, Rub{\'e}n},
      institution = {Federal Reserve Bank of St. Louis},
      year = {2014},
      number = {No. 2014-036A},
      type = {Working Paper},
      pubtype = {WP},
      url = {http://research.stlouisfed.org/wp/2014/2014-036.pdf}
    }
    

    Links to file:

  3. 2012

    Interjurisdictional Competition with Adverse Selection. Hernández-Murillo, Rubén. 2012. Working Paper No. 2012-052B. Federal Reserve Bank of St. Louis. http://research.stlouisfed.org/wp/2012/2012-052.pdf.

    Abstract:

    In this paper, I study the welfare consequences of imposing alternative regimes of competition between two local governments that compete for mobile firms which have private information on their degree of mobility. Competition among jurisdictions raises the firms’ rents to higher levels than if jurisdictions were to cooperate. Therefore, from the perspective of a utilitarian federation, constitutional constraints on the competition process may be desirable. I find that imposing a system of coarser policy instruments improves welfare relative to competition with discretionary instruments, because it reduces the socially costly rents that are granted to firms in equilibrium. I also find that the gains from resorting to constitutional constraints are maximal when communities are identical, but decline if the extent of asymmetry between locations (in terms of local market size or technological complementarities) increases.

    BibTeX entry:

    @techreport{fedlwp2012-052,
      title = {Interjurisdictional Competition with Adverse Selection},
      author = {Hern{\'a}ndez-Murillo, Rub{\'e}n},
      institution = {Federal Reserve Bank of St. Louis},
      year = {2012},
      number = {No. 2012-052B},
      type = {Working Paper},
      pubtype = {WP},
      url = {http://research.stlouisfed.org/wp/2012/2012-052.pdf}
    }
    

    Links to file:

  4. 2011

    The Effect of Neighborhood Spillovers on Mortgage Selection. Hernández-Murillo, Rubén, Alvin D. Murphy, and Rajdeep Sengupta. 2011. Working Paper No. 2011-036B. Federal Reserve Bank of St. Louis. http://research.stlouisfed.org/wp/2011/2011-036.pdf.

    BibTeX entry:

    @techreport{fedlwp2011-036,
      title = {The Effect of Neighborhood Spillovers on Mortgage Selection},
      author = {Hern{\'a}ndez-Murillo, Rub{\'e}n and Murphy, Alvin D. and Sengupta, Rajdeep},
      institution = {Federal Reserve Bank of St. Louis},
      year = {2011},
      number = {No. 2011-036B},
      type = {Working Paper},
      pubtype = {WP},
      url = {http://research.stlouisfed.org/wp/2011/2011-036.pdf}
    }
    

    Links to file: