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This edition was written by Sam Boocker, Georgia Nabors, Louise Sheiner, and Lorae Stojanovic.
Lindsey Currier, Edward L. Glaeser, and Gabriel E. Kreindler of Harvard measure the roughness of American roads using driver speed and vertical acceleration data from Uber drivers’ cell phones. Drivers tend to slow down where roads are rougher, imposing time costs of at least 31 cents per driver-mile on a median local road. Black and low-income residents drive on bumpier roads and therefore experience larger costs: A resident of an all-Black neighborhood who drives 3,000 miles per year on local roads incurs $318 of harm due to rough roads compared to a similar household in an all-white neighborhood. A resident of a town in the 20th percentile of income incurs $142 of harm due to rough roads compared to a resident of a town in the 80th percentile. Examining road repaving decisions in New York, Dallas, Columbus, and Portland, the authors find that only in New York does road roughness correlate with subsequent resurfacing decisions, suggesting that city administrators across the U.S. only weakly prioritize more damaged roads for maintenance work.
Xavier Gabaix of Harvard and co-authors study the role of households in asset demand using a novel dataset on monthly trading activity across a variety of asset classes and across the wealth distribution from January 2016 to March 2023. They show that the response to market returns depends on household wealth: less wealthy households tend to follow the market, selling when prices fall, whereas wealthier households tend to do the opposite, although these effects are quite small. Given the limited sensitivity of asset flows to market conditions and the contradictory responses across the wealth distribution, the authors conclude that the household sector as a whole is unlikely to be important in stabilizing financial market fluctuations.
Many foreign medical school graduates enter the U.S. on visas requiring them to reside in their home country for two years after completing an American medical residency. States can waive this requirement for a limited number of foreign doctors who commit to serving in high-need communities for three years. Breno Braga of the Urban Institute, Gaurav Khanna of the University of California, San Diego, and Sarah Turner of the University of Virginia examine the effects of a 2002 law change that expanded the number of waivers states could issue. The authors find that the expansion resulted in a 9% increase in foreign doctor availability over the ensuing 10 years in states previously constrained by the waiver cap. The increased number of foreign doctors was not offset by a reduction in U.S.-born doctors. Further, states with looser waiver requirements experienced a greater increase in the number of foreign-trained doctors in counties with a shortage of health professionals. The authors conclude that the waiver program expands access to medical care in underserved areas without crowding out American doctors.
"A soft landing is increasingly conceivable but in no way inevitable. I see four risks. The U.S. economy could run out of fuel. We could experience unexpected turbulence. Inflation could level off at a cruising altitude higher than our 2% target. And the landing could be delayed as the U.S. economy continues to defy expectations," says Tom Barkin, President of the Federal Reserve Bank of Richmond.
"Is inflation continuing its descent and is the broader economy continuing to fly smoothly? Conviction on both questions will determine the pace and timing of any changes in rates. There’s no autopilot. The data that come in this year will matter."
The Fiscal Ship challenges you to put the federal budget on a sustainable course. Pick from over 100 policy options to see if you can achieve your governing priorities while stabilizing the U.S. debt-to-GDP ratio.
