Twenty-fifth NBER Summer Institute held in 2004.

• Position: Bureau News - National Bureau of Economic Research

In the summer of 2004, the NBER held its twenty-fifth annual Summer Institute. More than 1300 economists from universities and organizations throughout the world attended. The papers presented at dozens of different sessions during the four-week Summer Institute covered a wide variety of topics. A complete agenda and many of the papers presented at the various sessions are available on the NBER's web site by clicking Summer Institute 2004 on our conference page, www.nber.org/confer.

Under the Economic Growth and Tax Relief Reconciliation Act of 2001, most U.S. taxpayers received a tax rebate between July and September, 2001. The week in which the rebate was mailed was based on the second-to-last digit of the taxpayer's Social Security number, which effectively is randomly assigned. Using special questions about the rebates added to the Consumer Expenditure Survey, Johnson, Parker, and Souleles exploit this historically unique experiment to measure the change in consumption caused by receipt of the rebate and to test the Permanent Income Hypothesis and related models. They find that households spent about 20-40 percent of their rebates on nondurable goods during the three-month period in which the rebate was received, and additional smaller, but still substantial, amounts in the two quarters after receipt. The implied effects on aggregate consumption demand are significant. The estimated responses are largest for households with relatively low liquid wealth or low income, which is consistent with liquidity constraints.

Battaglini and Coate study Pareto-efficient income taxation in an economy with infinitely-lived individuals whose income-generating abilities evolve according to a two-state Markov process. Their study yields two main results. First, when individuals are risk neutral, the fraction of individuals who face a positive marginal income tax rate is always positive but converges to zero. Moreover, the tax rate that these individuals face also goes to zero. Second, Pareto-efficient income tax systems can be time-consistent even when there is a high degree of correlation in ability types.

Primiceri provides an explanation for the run-up in U.S. inflation during the 1960s and 1970s and the sharp disinflation in the early 1980s. He presents a model in which rational policymakers learn about the behavior of the economy in real time and set stabilization policy optimally, conditional on their current beliefs. The steady state associated...