Why Has US Policy Uncertainty Risen since 1960?

By Scott R. Baker, Nicholas Bloom, Brandice Canes-Wrone, Steven J. Davis, and Jonathan Rodden

American Economic Review, May 2014

We consider two classes of explanations for the rise in policy-related economic uncertainty in the United States since 1960. The first stresses growth in government spending, taxes, and regulation. A second stresses increased political polarization and i...

The Mortgage Mess, the Press, and the Politics of Inattention

By Andrew Caplin and Roy Lowrance

American Economic Review, May 2014

In reviewing the Challenger tragedy, Richard Feynman identified a flawed O-Ring as the proximate cause and NASA's flawed safety culture as a deeper cause. There has been no similar investigation of the mortgage mess, which has been baptized rather than un...

Mafia and Public Spending: Evidence on the Fiscal Multiplier from a Quasi-experiment

By Antonio Acconcia, Giancarlo Corsetti, and Saverio Simonelli

American Economic Review, July 2014

A law issued to combat political corruption and Mafia infiltration of city councils in Italy has resulted in episodes of large, unanticipated, temporary contractions in local public spending. Using these episodes as instruments, we estimate the output mul...

E-lections: Voting Behavior and the Internet

By Oliver Falck, Robert Gold, and Stephan Heblich

American Economic Review, July 2014

This paper analyzes the effects on voting behavior of information disseminated over the Internet. We address endogeneity in Internet availability by exploiting regional and technological peculiarities of the preexisting voice telephony network that hinder...

Cross-Border Media and Nationalism: Evidence from Serbian Radio in Croatia

By Stefano DellaVigna, Ruben Enikolopov, Vera Mironova, Maria Petrova, and Ekaterina Zhuravskaya

American Economic Journal: Applied Economics, July 2014

How do nationalistic media affect animosity between ethnic groups? We consider one of Europe's deadliest conflicts since WWII, the Serbo-Croatian conflict. We show that, after a decade of peace, cross-border nationalistic Serbian radio triggers ethnic hat...

Meet the Press: How Voters and Politicians Respond to Newspaper Entry and Exit

By Francesco Drago, Tommaso Nannicini, and Francesco Sobbrio

American Economic Journal: Applied Economics, July 2014

This paper uses an original dataset covering the presence of local news in medium-large Italian cities in the period 1993–2010 to evaluate the effects of newspaper entry and exit on electoral participation, political selection, and government effici...

Local Institutions and the Dynamics of Community Sorting

By Andrea Robbett

American Economic Journal: Microeconomics, August 2014

This paper studies the dynamics by which populations with heterogeneous preferences for public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions best facilitate efficient self-organization whe...

Friends in High Places

By Lauren Cohen and Christopher J. Malloy

American Economic Journal: Economic Policy, August 2014

We demonstrate that personal connections amongst US politicians have a significant impact on Senate voting behavior. Networks based on alumni connections between politicians are consistent predictors of voting behavior. We estimate sharp measures that con...

Isolated Capital Cities, Accountability, and Corruption: Evidence from US States

By Filipe R. Campante and Quoc-Anh Do

American Economic Review, August 2014

We show that isolated capital cities are robustly associated with greater levels of corruption across US states, in line with the view that this isolation reduces accountability. We then provide direct evidence that the spatial distribution of population ...

What Do We Learn from the Weather? The New Climate-Economy Literature

By Melissa Dell, Benjamin F. Jones, and Benjamin A. Olken

Journal of Economic Literature, September 2014

A rapidly growing body of research applies panel methods to examine how temperature, precipitation, and windstorms influence economic outcomes. These studies focus on changes in weather realizations over time within a given spatial area and demonstrate im...

Competition and Ideological Diversity: Historical Evidence from US Newspapers

By Matthew Gentzkow, Jesse M. Shapiro, and Michael Sinkinson

American Economic Review, October 2014

We study the competitive forces which shaped ideological diversity in the US press in the early twentieth century. We find that households preferred like-minded news and that newspapers used their political orientation to differentiate from competitors...

Economic Shocks and Conflict: Evidence from Commodity Prices

By Samuel Bazzi and Christopher Blattman

American Economic Journal: Macroeconomics, October 2014

Higher national incomes are correlated with political stability. Is this relationship causal? We test three theories linking income to conflict with new data on export price shocks. Price shocks have no effect on new conflict, even large shocks in high...

On the Selection of Arbitrators

By Geoffroy de Clippel, Kfir Eliaz, and Brian Knight

American Economic Review, November 2014

A key feature of arbitration is the possibility for conflicting parties to participate in the selection of the arbitrator, the individual who will rule the case. We analyze this problem of the selection of arbitrators from the perspective of implementatio...

The Strategic Dis/advantage of Voting Early

By Eddie Dekel and Michele Piccione

American Economic Journal: Microeconomics, November 2014

Under sequential voting, voting late enables conditioning on which candidates are viable, while voting early can influence the field of candidates. But the latter effect can be harmful: shrinking the field increases not only the likelihood that future ...

Hypothetical Thinking and Information Extraction in the Laboratory

By Ignacio Esponda and Emanuel Vespa

American Economic Journal: Microeconomics, November 2014

In several common-value environments (e.g., auctions or elections), players should make informational inferences from opponents' strategies under certain hypothetical events (e.g., winning the auction or being pivotal). We design a voting experiment that ...

Voter Preferences, Polarization, and Electoral Policies

By Yuichiro Kamada and Fuhito Kojima

American Economic Journal: Microeconomics, November 2014

In most variants of the Hotelling-Downs model of election, it is assumed that voters have concave utility functions. This assumption is arguably justified in issues such as economic policies, but convex utilities are perhaps more appropriate in others suc...

The Dynamics of Firm Lobbying

By William R. Kerr, William F. Lincoln, and Prachi Mishra

American Economic Journal: Economic Policy, November 2014

How is economic policy made? In this paper we study a key determinant of the answer to the question: lobbying by firms. Estimating a binary choice model of firm behavior, we find significant evidence for the idea that barriers to entry induce persistence ...

A Test for the Rational Ignorance Hypothesis: Evidence from a Natural Experiment in Brazil

By Fernanda Leite Lopez de Leon and Renata Rizzi

American Economic Journal: Economic Policy, November 2014

This paper tests the rational ignorance hypothesis by Downs (1957). This theory predicts that people do not acquire costly information to educate their votes. We provide new estimates for the effect of voting participation by exploring the Brazilian du...

The Economics of Guilds

By Sheilagh Ogilvie

Journal of Economic Perspectives, Fall 2014

Occupational guilds in medieval and early modern Europe offered an effective institutional mechanism whereby two powerful groups, guild members and political elites, could collaborate in capturing a larger slice of the economic pie and redistributing it t...

Retrospectives: The Cold-War Origins of the Value of Statistical Life

By H. Spencer Banzhaf

Journal of Economic Perspectives, Fall 2014

This paper traces the history of the "Value of Statistical Life" (VSL), which today is used routinely in benefit-cost analysis of life-saving investments. The "value of statistical life" terminology was introduced by Thomas Schelling (1968) in his essay, ...