ECON 4624 - Mid-term assignment

September 29, 2016

This exercise set consists of four (4) pages.

1 Practicalities

As noted at the start of the course. Part (50%) of the exam will be a discussion of (some

aspects) of one of the papers we lecture over in this course. This exercise is meant to

provide an opportunity to try out an example of that part of the exam. The exam is only

3 hours, and the discussion of some part of a paper on the syllabus is only one halvf of

the exam, so think hard about what are the key points, and how you can condense your

discussion to get it “exam like”. In no case should you submit more than three pages of

text, one-half spaced, 12 pt, Times New Roman (or similar), 2.5 cm margins. If you want

to add illustrations, like graphs, you may add two pages for these (only the graphs with

brief captions, no notes). Please hand in your paper in fronter by October 14.

2 Exercise

Chetty, Looney and Kroft (2013, hereafter CLK) discuss how salience a�ects the incidence

of taxation.

1. Briefly explain what determines the incidence of a sales tax in the basic model.

2. Table 4 from CLK is reproduced below.

(a) Explain the main message of this table.

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(b) What is the empirical approach underlying this table?

3. Figure 2A from CLK is reproduced below.

(a) Explain the main message of this figure.

(b) What is the empirical approach employed by CLK in this analysis?

(c) Explain the identifying assumption underlying this strategy. Briefly discuss if

this is a plausible assumption in this context.

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