American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Macroeconomic Priorities Robert E.LucasJr. 1 14 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=1&issue_date=March 2003 10.1257/000282803321455133 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data Judith A.Chevalier Anil KKashyap Peter E.Rossi 15 37 We examine retail and wholesale prices for a large supermarket chain over seven and one-half years. We find that prices fall on average during seasonal demand peaks for a product, largely due to changes in retail margins. Retail margins for specific goods fall during peak demand periods for that good, even if these periods do not coincide with aggregate demand peaks for the retailer. This is consistent with "loss-leader" models of retailer competition. Models stressing cyclical demand elasticities or cyclical firm conduct are less consistent with our findings. Manufacturer behavior plays a limited role in the countercyclicality of prices. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=2&issue_date=March 2003 10.1257/000282803321455142 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Micro Effects of Macro Announcements: Real-Time Price Discovery in Foreign Exchange Torben G.Andersen TimBollerslev Francis X.Diebold ClaraVega 38 62 Using a new data set consisting of six years of real-time exchange-rate quotations, macroeconomic expectations, and macroeconomic realizations, we characterize the conditional means of U.S. dollar spot exchange rates. In particular, we find that announcement surprises produce conditional mean jumps; hence high-frequency exchange-rate dynamics are linked to fundamentals. The details of the linkage are intriguing and include announcement timing and sign effects. The sign effect refers to the fact that the market reacts to news in an asymmetric fashion: bad news has greater impact than good news, which we relate to recent theoretical work on information processing and price discovery. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=3&issue_date=March 2003 10.1257/000282803321455151 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Stages of Diversification JeanImbs RomainWacziarg 63 86 This paper studies the evolution of sectoral concentration in relation to the level of per capita income. We show that various measures of sectoral concentration follow a U-shaped pattern across a wide variety of data sources: countries first diversify, in the sense that economic activity is spread more equally across sectors, but there exists, relatively late in the development process, a point at which they start specializing again. We discuss this finding in light of existing theories of trade and growth, which generally predict a monotonic relationship between income and diversification. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=4&issue_date=March 2003 10.1257/000282803321455160 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article The Survival of the Welfare State JohnHassler José V.Rodríguez Mora KjetilStoresletten AbrizioZilibotti 87 112 This paper provides an analytical characterization of Markov perfect equilibria in a model with repeated voting, where agents vote over distortionary income redistribution. A key result is that the future constituency for redistributive policies depends positively on current redistribution, since this affects both private investments and the future distribution of voters. The model features multiple equilibria. In some equilibria, positive redistribution persists forever. In other equilibria, even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period. Skill-biased technical change makes the survival of the welfare state less likely. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=5&issue_date=March 2003 10.1257/000282803321455179 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article The Economic Costs of Conflict: A Case Study of the Basque Country AlbertoAbadie JavierGardeazabal 113 132 This article investigates the economic effects of conflict, using the terrorist conflict in the Basque Country as a case study. We find that, after the outbreak of terrorism in the late 1960's, per capita GDP in the Basque Country declined about 10 percentage points relative to a synthetic control region without terrorism. In addition, we use the 1998-1999 truce as a natural experiment. We find that stocks of firms with a significant part of their business in the Basque Country showed a positive relative performance when truce became credible, and a negative relative performance at the end of the cease-fire. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=6&issue_date=March 2003 10.1257/000282803321455188 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Lying for Strategic Advantage: Rational and Boundedly Rational Misrepresentation of Intentions Vincent P.Crawford 133 149 Starting from an example of the Allies' decision to feint at Calais and attack Normandy on D-Day, this paper models misrepresentation of intentions to competitors or enemies. Allowing for the possibility of bounded strategic rationality and rational players' responses to it yields a sensible account of lying via costless, noiseless messages. In some leading cases, the model has generically unique pure-strategy sequential equilibria, in which rational players exploit boundedly rational players, but are not themselves fooled. In others, the model has generically essentially unique mixed-strategy sequential equilibria, in which rational players' strategies protect all players from exploitation. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=7&issue_date=March 2003 10.1257/000282803321455197 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article The Evolution of Human Life Expectancy and Intelligence in Hunter-Gatherer Economies Arthur J.Robson Hillard S.Kaplan 150 169 The economics of hunting and gathering must have driven the biological evolution of human characteristics, since hunter-gatherer societies prevailed for the two million years of human history. These societies feature huge intergenerational resource flows, suggesting that these resource flows should replace fertility as the key demographic consideration. It is then theoretically expected that life expectancy and brain size would increase simultaneously, as apparently occurred during our evolutionary history. The brain here is considered as a direct form of bodily investment, but also crucially as facilitating further indirect investment by means of learning-by-doing. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=8&issue_date=March 2003 10.1257/000282803321455205 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Gravity with Gravitas: A Solution to the Border Puzzle James E.Anderson Ericvan Wincoop 170 192 Gravity equations have been widely used to infer trade flow effects of various institutional arrangements. We show that estimated gravity equations do not have a theoretical foundation. This implies both that estimation suffers from omitted variables bias and that comparative statics analysis is unfounded. We develop a method that (i) consistently and efficiently estimates a theoretical gravity equation and (ii) correctly calculates the comparative statics of trade frictions. We apply the method to solve the famous McCallum border puzzle. Applying our method, we find that national borders reduce trade between industrialized countries by moderate amounts of 20-50 percent. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=9&issue_date=March 2003 10.1257/000282803321455214 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Portfolio Choice and Trading in a Large 401(k) Plan JulieAgnew PierluigiBalduzzi AnnikaSundén 193 215 We study nearly 7,000 retirement accounts during the April 1994-August 1998 period. Several interesting patterns emerge. Most asset allocations are extreme (either 100 percent or zero percent in equities) and there is inertia in asset allocations. Equity allocations are higher for males, married investors, and for investors with higher earnings and more seniority on the job; equity allocations are lower for older investors. There is very limited portfolio reshuffling, in sharp contrast to discount brokerage accounts. Daily changes in equity allocations correlate only weakly with same-day equity returns and do not correlate with future equity returns. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=10&issue_date=March 2003 10.1257/000282803321455223 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Optimal Contracting with Subjective Evaluation W.Bentley MacLeod 216 240 This paper extends the standard principal-agent model to allow for subjective evaluation. The optimal contract results in more compressed pay relative to the case with verifiable performance measures. Moreover, discrimination against an individual implies lower pay and performance, suggesting that the extent of discrimination as measured after controlling for performance may underestimate the level of true discrimination. Finally, the optimal contract entails the use of bonus pay rather than the threat of dismissal, hence neither "efficiency wages" nor the right to dismiss an employee are necessary ingredients for an optimal incentive contract. http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=11&issue_date=March 2003 10.1257/000282803321455232 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Corporate Lobbying and Commitment Failure in Capital Taxation NicolasMarceau MichaelSmart 241 251 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=12&issue_date=March 2003 10.1257/000282803321455241 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Access to Food and the Biological Standard of Living: Perspectives on the Nutritional Status of Native Americans JohnKomlos 252 255 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=13&issue_date=March 2003 10.1257/000282803321455250 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Redistributive Promises and the Adoption of Economic Reform SanjayJain Sharun W.Mukand 256 264 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=14&issue_date=March 2003 10.1257/000282803321455269 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Speed Limit Policies: The Output Gap and Optimal Monetary Policy CarlWalsh 265 278 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=15&issue_date=March 2003 10.1257/000282803321455278 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion Susan M.Dynarski 279 288 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=16&issue_date=March 2003 10.1257/000282803321455287 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Expert Opinion and Compensation: Evidence from a Musical Competition Victor A.Ginsburgh Jan C.van Ours 289 296 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=17&issue_date=March 2003 10.1257/000282803321455296 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Choosing the Wrong Calling Plan? Ignorance and Learning Eugenio J.Miravete 297 310 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=18&issue_date=March 2003 10.1257/000282803321455304 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Energy, the Stock Market, and the Putty-Clay Investment Model ChaoWei 311 323 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=19&issue_date=March 2003 10.1257/000282803321455313 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Winter Blues: A SAD Stock Market Cycle Mark J.Kamstra Lisa A.Kramer Maurice D.Levi 324 343 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=20&issue_date=March 2003 10.1257/000282803321455322 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Exchange-Rate Regimes and International Trade: Evidence from the Classical Gold Standard Era J.Ernesto López-Córdova Christopher M.Meissner 344 353 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=21&issue_date=March 2003 10.1257/000282803321455331 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article The Mismatch Between Life Insurance Holdings and Financial Vulnerabilities: Evidence from the Health and Retirement Study B. DouglasBernheim LorenzoForni JagadeeshGokhale Laurence J.Kotlikoff 354 365 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=22&issue_date=March 2003 10.1257/000282803321455340 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Monetary and Nonmonetary Punishment in the Voluntary Contributions Mechanism DavidMasclet CharlesNoussair StevenTucker Marie-ClaireVilleval 366 380 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=23&issue_date=March 2003 10.1257/000282803321455359 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Consumer Response to Tax Rebates Matthew D.Shapiro JoelSlemrod 381 396 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=24&issue_date=March 2003 10.1257/000282803321455368 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Do Consumers React to Anticipated Income Changes? Evidence from the Alaska Permanent Fund Chang-TaiHsieh 397 405 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=25&issue_date=March 2003 10.1257/000282803321455377 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article "3rd of tha Month": Do Social Security Recipients Smooth Consumption Between Checks? MelvinStephensJr. 406 422 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=26&issue_date=March 2003 10.1257/000282803321455386 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Jealousy and Equilibrium Overconsumption BillDupor Wen-FangLiu 423 428 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=27&issue_date=March 2003 10.1257/000282803321455395 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article The Role of the Family in Immigrants' Labor-Market Activity: An Evaluation of Alternative Explanations: Comment Francine D.Blau Lawrence M.Kahn Joan Y.Moriarty AndrePortela Souza 429 447 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=28&issue_date=March 2003 10.1257/000282803321455403 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Organizational Design and Technology Choice under Intrafirm Bargaining: Comment Catherine C.de Fontenay Joshua S.Gans 448 455 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=29&issue_date=March 2003 10.1257/000282803321455412 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Organizational Design and Technology Choice under Intrafirm Bargaining: Reply Lars A.Stole JeffreyZwiebel 456 457 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=30&issue_date=March 2003 10.1257/000282803321455421 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Willingness To Pay and Willingness To Accept: How Much Can They Differ? Comment Edoh Y.Amiran Daniel A.Hagen 458 463 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=31&issue_date=March 2003 10.1257/000282803321455430 American Economic Association Nashville, TN 0002-8282 American Economic Review http://www.aeaweb.org/aer/ 93 1 March 2003 http://www.aeaweb.org/articles/issue_detail.php?journal=AER&volume=93&issue=1&issue_date=March 2003 Journal Article Willingness To Pay and Willingness To Accept: How Much Can They Differ? Reply W. MichaelHanemann 464 464 http://www.aeaweb.org/articles/article_detail.php?journal=AER&volume=93&issue=1&article=32&issue_date=March 2003 10.1257/000282803321455449