Larry Ball's The Fed and Lehman Brothers: A Review Essay

By V. V. Chari

Journal of Economic Literature, December 2022

Laurence Ball argues that the Federal Reserve (the Fed) could—and should—have bailed out Lehman Brothers so that it did not have to declare bankruptcy. He presents compelling evidence that it could have. I argue that the view that the Fed should not b...

Did US Politicians Expect the China Shock?

By Matilde Bombardini, Bingjing Li, and Francesco Trebbi

American Economic Review, January 2023

Information sets, expectations, and preferences of politicians are fundamental, but unobserved determinants of their policy choices. Employing repeated votes in the US House of Representatives on China's normal trade relations (NTR) status during the two ...

A Glimpse of Freedom: Allied Occupation and Political Resistance in East Germany

By Luis R. Martinez ⓡ Jonas Jessen ⓡ Guo Xu

American Economic Journal: Applied Economics, January 2023

This paper exploits the idiosyncratic line of contact separating Allied and Soviet troops within East Germany at the end of WWII to study political resistance in a non-democracy. When Nazi Germany surrendered, 40 percent of what would become the authorita...

When Is a Contrarian Adviser Optimal?

By Robert Evans and Sönje Reiche

American Economic Journal: Microeconomics, February 2023

We compare contrarian to conformist advice, a contrarian expert being one whose preference bias is against the decision-maker's prior optimal decision. Optimality of an expert depends on characteristics of prior information and learning. If either the exp...

School Boards and Education Production: Evidence from Randomized Ballot Order

By Ying Shi and John D. Singleton

American Economic Journal: Economic Policy, February 2023

We examine the causal influence of educators elected to the school board on local education production. The key empirical challenge is that school board composition is endogenously determined through the electoral process. To overcome this, we develop a n...

Partisanship and Fiscal Policy in Economic Unions: Evidence from US States

By Gerald Carlino, Thorsten Drautzburg, Robert Inman, and Nicholas Zarra

American Economic Review, March 2023

Partisanship of state governors affects the efficacy of US federal fiscal policy. Using close election data, we find partisan differences in the marginal propensity to spend federal intergovernmental transfers: Republican governors spend less than Democra...

Persuasion through Slanted Language: Evidence from the Media Coverage of Immigration

By Milena Djourelova

American Economic Review, March 2023

I study the persuasive effects of slanted language, exploiting a ban on the politically charged term "illegal immigrant" by the Associated Press (AP) news wire. My empirical strategy combines the timing of the ban with variation across media outlets in th...

Infrastructure Costs

By Leah Brooks and Zachary Liscow

American Economic Journal: Applied Economics, April 2023

Despite infrastructure's importance to the US economy, evidence on its cost trajectory over time is sparse. We document real spending per new mile over the history of the Interstate Highway System. We find that spending per mile increased more than threef...

At the Helm, Kirk or Spock? The Pros and Cons of Charismatic Leadership

By Benjamin E. Hermalin

American Economic Journal: Microeconomics, May 2023

Charismatic leaders are often desired. At the same time, experience, especially with demagogues, as well as social science studies, raise doubts about such leaders. This paper offers explanations for charismatic leadership's "mixed report card." It offers...

Too Good to Be True? Retention Rules for Noisy Agents

By Francisco Espinosa ⓡ Debraj Ray

American Economic Journal: Microeconomics, May 2023

An agent who privately knows his type seeks to be retained by a principal. Agents signal their type with some ambient noise, but can alter this noise, perhaps at some cost. Our main finding is that in equilibrium, the principal treats extreme signals in e...

Go with the Politician

By Yongwei Nian and Chunyang Wang

American Economic Journal: Economic Policy, May 2023

Chinese local leaders are frequently moved across prefectures. By combining local leader rotation data and comprehensive firm land parcel purchase data across prefectures from 2006 to 2016, this paper examines how firm-politician connections affect resour...

Heterogeneity in Attitude Responses: Evidence from Bostock v. Clayton County

By Cameron Deal

AEA Papers and Proceedings, May 2023

Traditional models of policy formation emphasize how political attitudes and actions affect policy outcomes. However, the converse may occur—policies are often a signal to constituents about the priorities and positions of both political actors and the ...

The Health of Democracies during the Pandemic: Results from a Randomized Survey Experiment

By Marcella Alsan, Luca Braghieri, Sarah Eichmeyer, Minjeong Joyce Kim, Stefanie Stantcheva, and David Y. Yang

AEA Papers and Proceedings, May 2023

Concerns have been raised about the "demise of democracy," possibly accelerated by pandemic-related restrictions. Using a survey experiment involving 8,206 respondents from 5 Western democracies, we find that subjects randomly exposed to information regar...

Government Trust and COVID-19 Vaccination: The Role of Supply Disruptions and Political Allegiances in Sierra Leone

By Anbar Aizenman, Fatu E. Conteh, Rachel Glennerster, Samantha Horn, Desmond M. Kangbai, Anne Karing, and Sarah Shaukat

AEA Papers and Proceedings, May 2023

We use data on the universe of COVID-19 vaccines in Sierra Leone to examine the relationship between COVID-19 vaccination take-up and support for the party in power and whether interruptions to vaccine supply reduced take-up of second doses. We find that ...

Constitutions, Politics, and Economics: A Review Essay on Persson and Tabellini's The Economic Effects of Constitutions

By Daron Acemoglu

Journal of Economic Literature, December 2005

In this essay, I review the new book by Torsten Persson and Guido Tabellini, The Economic Effects of Constitutions, which investigates the policy and economic consequences of different forms of government and electoral rules. I also take advantag...

Status Quo Property Protection in Politico-Legal Systems

By Roger Lagunoff

American Economic Review: Insights, June 2023

This paper models status quo (SQ) protection of property rights. A politico-legal system determines eligibility of citizen groups for protection. A ruling authority can reallocate property if and only if reallocation is preferable to the status quo for on...

When Do Politicians Appeal Broadly? The Economic Consequences of Electoral Rules in Brazil

By Moya Chin

American Economic Journal: Applied Economics, July 2023

Electoral rules determine how voters' preferences are aggregated and translated into political representation. Using a regression discontinuity design, I contrast single- and two-round elections in Brazil. In two-round elections, the eventual winner must ...

From Hashtag to Hate Crime: Twitter and Antiminority Sentiment

By Karsten Müller and Carlo Schwarz

American Economic Journal: Applied Economics, July 2023

We study whether social media can amplify antiminority sentiment with a focus on Donald Trump's political rise. Using an instrumental variable strategy based on Twitter's early adopters at the South by Southwest festival in 2007, we find that higher Twitt...

Heroes and Villains: The Effects of Heroism on Autocratic Values and Nazi Collaboration in France

By Julia Cagé, Anna Dagorret, Pauline Grosjean, and Saumitra Jha

American Economic Review, July 2023

We measure how a network of heroes can legitimize and diffuse extreme political behaviors. We exploit newly declassified intelligence files, novel voting data, and regimental histories to show that home municipalities of French line regiments arbitrarily ...

Influence Campaigns

By Evan Sadler

American Economic Journal: Microeconomics, August 2023

Firms and politicians, among others, invest heavily to influence people's opinions. Because peers influence one another, these efforts must account for social networks. Using a model of opinion dynamics with a non-degenerate steady state, I develop a new ...