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This edition was written by Tristan Loa, Chase Parry, Jack Spira, and David Wessel.
Investigating incomplete take-up of the Supplemental Nutrition Assistance Program (SNAP), which serves an estimated 88% of eligible individuals nationwide but as few as 59% in some states, Marianne Bitler of the University of California, Davis, and co-authors examine how distance from SNAP offices affects program participation. Focusing on Indiana, where the state rents its offices and frequently relocates them upon lease expirations, the authors find that closing an office in a given census tract increases the average distance between a resident of that tract and an office from 0.6 to nearly 4 miles and reduces SNAP participation in the affected tract by 7% over the following three months and 9% over the following two years. Office openings, conversely, reduce distance and increase participation rates. These results suggest that despite the option to certify or recertify for SNAP eligibility online or by phone, the availability of caseworkers to assist with the process or the ability to access multiple social services in one location may lead many participants to enroll in person or not at all.
Why do firms producing similar products with similar inputs show vastly different productivity levels? Leveraging new audit questions in a 2021 firm-level Census Bureau Management and Organizational Practices Survey, IRS tax data, and detailed financial records from Sageworks, a financial data provider, John M. Barrios of Yale and co-authors find that firms that adhere to higher-quality reporting standards with external verification through audits demonstrate significantly higher productivity, survival, and growth—roughly equal to and on top of the benefits of good management. Audits increase productivity through two channels: they provide accurate internal information for better decision making and they reduce measurement bias by limiting production understatement for tax purposes. Productivity gains emerge gradually after adoption, suggesting firms learn to use better information rather than immediate reporting changes. The authors also find that high-quality financial reporting and strong management practices reinforce each other, producing gains greater than the sum of each alone. They conclude that high- quality financial reporting is a first-order determinant of both actual and measured firm productivity.
Zhuokai Huang of Harvard and co-authors find that the United States’ share of global GDP and income declined from 1960 to 2020 as barriers to trade were reduced, but that increased openness to trade nevertheless raised U.S. welfare. Falling trade barriers worldwide reduced costs in other countries more than in the U.S., lowering relative prices for foreign goods and driving substitution away from U.S.-made goods, contributing to faster GDP growth abroad than in the U.S. Similarly, rapid productivity growth in many countries—especially in Japan and post-1978 China—led to a reduction in the U.S. share of global income as decreased demand for American goods slowed U.S. wage growth. Both reduced trade frictions and expansion of global production led to a fall in consumer prices, however, raising aggregate welfare in the U.S.
Q: “Looking from outside, it looks as though Japan’s economy weathered this [shock of the tariffs and uncertainty] pretty well, and turned out really not to be a very important macroeconomic shock. Is that how you see it?"
A: “Yes, I think it has been that way because of essentially two reasons. First, tariff effects on the U.S. economy have been smaller than people had anticipated earlier this year," says Kazuo Ueda, Governor of the Bank of Japan.
"There’s a couple of reasons for this. I would say so far U.S. corporates have not swallowed the burden of tariffs without fully passing tariffs through to consumer prices. Therefore, consumption has been resilient. And then there has been this strengthening AI-related spending. On the Japanese side, one of the major export items is automobiles. Japanese automakers have chosen to lower export prices without passing them to U.S. consumers. That has stabilized the volume of auto exports, thus not creating large negative effects on employment production here."
Q: “Is there a possibility that Japanese growth could really accelerate because of a big productivity boom...?”
A: “First of all, population is declining here, but still, labor supply has been rising for some years because of the higher participation of females and the elderly. I don’t know how long this will continue. In addition, there has been increases in foreign labor. What will happen to this will depend on the government’s policies for foreign labor. Now, apart from this, much will depend on what we will be able to do with regard things like AI adoption, and in turn, whether or not we will be able to raise productivity, offsetting the expected labor shortage. We are, I guess, early days in this experiment, so I don’t know what will happen. I can’t say anything definite, but hopefully, we will find ways to increase productivity with help from AI. Actually, the ongoing or acute labor shortage we are facing could be, in a sense, a tailwind for efficient AI adoption.”
Call for papers
We are seeking proposals for papers on the municipal bond market and state and local fiscal policy to be considered for the Municipal Finance Conference to be held in-person Tuesday, July 21, 2026 and Wednesday, July 22, 2026 in Washington, D.C.
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