Frontiers of economic research

Ulrik Beck, Benedikte Bjerge, Marcel Fafchamps, 06 February 2016

There are good reasons to think that social networks can reduce barriers to the exchange of production factors. Using data from 51 villages in Gambia, this column examines whether transfers of land between rural households improve efficiency, and whether social networks help or hinder such transfers. The results suggest that social ties may indeed be able to offset the negative impact of a limited or non-existing institutional framework.

Gabriel M. Ahlfeldt, Pantelis Koutroumpis, Tommaso Valletti, 04 February 2016

Many governments are committed to promoting the roll-out of fibre optic broadband networks. Little is known, however, about the economic value of these investments. Using house prices to infer the value of high-speed internet access, this column discusses the impact of fibre optic broadband in England. A fast broadband connection is found to increase house prices sufficiently in urban areas to pass a cost-benefit test, but the case for universal delivery in rural areas is not as strong. And even in areas where people are willing to pay for a faster connection, internet providers may be unwilling to deliver it only to see house-sellers appropriate the rent from their investments.

Stephen Hansen, Michael McMahon, 03 February 2016

In addition to setting interest rates, central banks also communicate with the public about economic conditions and future actions. While it has been established that communication can drive expectations, less is known about how it does so. This column attempts to shed light on this question. Applying novel measures to the content of Federal Reserve statements, it shows that forward guidance is a more important driver of market variables than disclosure of information about economic conditions.

Alessandro Gavazza, Mattia Nardotto, Tommaso Valletti, 31 January 2016

The internet is lauded for increasing access to information, but it is unclear whether this translates into a better-informed and more engaged voting populace. This column uses UK data to determine how the internet has changed voting patterns and aggregate policy choices. Internet penetration is found to be associated with a decrease in voter turnout, mainly among the lower socioeconomic demographic. Internet diffusion is also found to reduce local government expenditure, in particular on policies targeting less-educated voters. These findings point to a trade-off between the ‘digital divide’ and the ‘political divide’.

Christian Helmers, Pramila Krishnan, Manasa Patnam, 25 January 2016

The growth of e-commerce has seen an enormous increase in the choice of products available online. With recent evidence from psychology suggesting that too much choice can impede decision making, this column examines whether consumers’ online choices are consistent with models of limited attention. High-frequency, transaction-level data from an online retail store reveal that consumers are influenced by recommendations. This suggests consumers do indeed have limited attention and simplify decision making by focusing on a subset of available products.

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