Self-Fulfilling Currency Crises: The Role of Interest Rates

By Christian Hellwig, Arijit Mukherji, and Aleh Tsyvinski

American Economic Review, December 2006

We develop a model of currency crises, in which traders are heterogeneously informed, and interest rates are endogenously determined in a noisy rational expectations equilibrium. In our model, multiple equilibria result from distinct roles an interest ...

Crises and Prices: Information Aggregation, Multiplicity, and Volatility

By George-Marios Angeletos and Iván Werning

American Economic Review, December 2006

Crises are volatile times when endogenous sources of information are closely monitored. We study the role of information in crises by introducing a financial market in a coordination game with imperfect information. The asset price aggregates dispersed...

In the Right Place at the Wrong Time: The Role of Firms and Luck in Young Workers' Careers

By Till von Wachter and Stefan Bender

American Economic Review, December 2006

We examine administrative data on young German workers and their employers to study the long-term effects of an early career job loss. To account for nonrandom sorting of workers into firms with different turnover rates and for selective job mobility, ...

Incentives and Prosocial Behavior

By Roland Bénabou and Jean Tirole

American Economic Review, December 2006

We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive fo...

The Hidden Costs of Control

By Armin Falk and Michael Kosfeld

American Economic Review, December 2006

We analyze the consequences of control on motivation in an experimental principalagent game, where the principal can control the agent by implementing a minimum performance requirement before the agent chooses a productive activity. Our results show th...

Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform

By Dani Rodrik

Journal of Economic Literature, December 2006

Proponents and critics alike agree that the policies spawned by the Washington Consensus have not produced the desired results. The debate now is not over whether the Washington Consensus is dead or alive, but over what will replace it. An important ma...

The Cross Section of Foreign Currency Risk Premia and Consumption Growth Risk

By Hanno Lustig and Adrien Verdelhan

American Economic Review, March 2007

Aggregate consumption growth risk explains why low interest rate currencies do not appreciate as much as the interest rate differential and why high interest rate currencies do not depreciate as much as the interest rate differential. Domestic investor...

Bureaucrats or Politicians? Part I: A Single Policy Task

By Alberto Alesina and Guido Tabellini

American Economic Review, March 2007

This paper investigates the normative criteria that guide the allocation of a policy task to an elected politician versus an independent bureaucrat. The bureaucrat is preferable for technical tasks for which ability is more important than effort, or if ...

The Motivation and Bias of Bureaucrats

By Canice Prendergast

American Economic Review, March 2007

Many individuals are motivated to exert effort because they care about their jobs, rather than because there are monetary consequences to their actions. The intrinsic motivation of bureaucrats is the focus of this paper, and three primary results are s...

Bounding Revenue Comparisons across Multi-Unit Auction Formats under ε-Best Response

By James T. E. Chapman, David McAdams, and Harry J. Paarsch

American Economic Review, May 2007

The Search for Economics Talent: Doctoral Completion and Research Productivity

By Wayne A. Grove and Stephen Wu

American Economic Review, May 2007

Adding a Stick to the Carrot? The Interaction of Bonuses and Fines

By Ernst Fehr and Klaus M. Schmidt

American Economic Review, May 2007

On Quitting Rights in Mechanism Design

By Olivier Compte and Philippe Jehiel

American Economic Review, May 2007

An Ascending Auction for Interdependent Values: Uniqueness and Robustness to Strategic Uncertainty

By Dirk Bergemann and Stephen Morris

American Economic Review, May 2007

Some Evolutionary Economics of Family Partnerships

By Theodore C. Bergstrom

American Economic Review, May 2007

Habits, Peers, and Happiness: An Evolutionary Perspective

By Luis Rayo and Gary S. Becker

American Economic Review, May 2007

Integrated Insurance Design in the Presence of Multiple Medical Technologies

By Dana Goldman and Tomas J. Philipson

American Economic Review, May 2007

How Occupied France Financed Its Own Exploitation in World War II

By Filippo Occhino, Kim Oosterlinck, and Eugene N. White

American Economic Review, May 2007

Signaling Character in Electoral Competition

By Navin Kartik and R. Preston McAfee

American Economic Review, June 2007

We study a one-dimensional Hotelling-Downs model of electoral competition with the following innovation: a fraction of candidates have "character" and are exogenously committed to a campaign platform; this is unobservable to voters. Character is desira...

Harmonization and Side Payments in Political Cooperation

By Bård Harstad

American Economic Review, June 2007

For two districts or countries that try to internalize externalities, I analyze a bargaining game under private information. I derive conditions for when it is efficient with uniform policies across regions—with and without side payments— a...