Are Consumers Myopic? Evidence from New and Used Car Purchases

By Meghan R. Busse, Christopher R. Knittel, and Florian Zettelmeyer

American Economic Review, February 2013

We investigate whether car buyers are myopic about future fuel costs. We estimate the effect of gasoline prices on short-run equilibrium prices of cars of different fuel economies. We then compare the implied changes in willingness-to-pay to the associat...

The Impact of Medical Liability Standards on Regional Variations in Physician Behavior: Evidence from the Adoption of National-Standard Rules

By Michael Frakes

American Economic Review, February 2013

I explore the association between regional variations in physician behavior and the geographical scope of malpractice standards of care. I estimate a 30-50 percent reduction in the gap between state and national utilization rates of various treatments ...

Innovation and Institutional Ownership

By Philippe Aghion, John Van Reenen, and Luigi Zingales

American Economic Review, February 2013

We find that greater institutional ownership is associated with more innovation. To explore the mechanism, we contrast the "lazy manager" hypothesis with a model where institutional owners increase innovation incentives through reducing career risks. T...

Of Smart Phone Wars and Software Patents

[Symposium: Patents]

By Stuart Graham and Saurabh Vishnubhakat

Journal of Economic Perspectives, Winter 2013

Among the main criticisms currently confronting the US Patent and Trademark Office are concerns about software patents and what role they play in the web of litigation now proceeding in the smart phone industry. We will examine the evidence on the litigat...

Designing Random Allocation Mechanisms: Theory and Applications

By Eric Budish, Yeon-Koo Che, Fuhito Kojima, and Paul Milgrom

American Economic Review, April 2013

Randomization is commonplace in everyday resource allocation. We generalize the theory of randomized assignment to accommodate multi-unit allocations and various real-world constraints, such as group-specific quotas ("controlled choice") in school choi...

Multi-Product Firms and Exchange Rate Fluctuations

By Arpita Chatterjee, Rafael Dix-Carneiro, and Jade Vichyanond

American Economic Journal: Economic Policy, May 2013

This paper studies the effect of exchange rate shocks on export behavior of multi-product firms. We provide a theoretical framework illustrating how firms adjust their prices, quantities, product scope, and sales distribution across products in the eve...

Immigrants' Labor Supply and Exchange Rate Volatility

By Arash Nekoei

American Economic Journal: Applied Economics, October 2013

Are an immigrant's decisions affected in real time by her home country's economy? I examine this question by exploiting exchange rate variations as exogenous price shocks to immigrants' budget constraints. I find that in response to a 10 percent dollar...

Exchange Rate Predictability

By Barbara Rossi

Journal of Economic Literature, December 2013

The main goal of this article is to provide an answer to the question: does anything forecast exchange rates, and if so, which variables? It is well known that exchange rate fluctuations are very difficult to predict using economic models, and that a r...

Trade Adjustment and Productivity in Large Crises

By Gita Gopinath and Brent Neiman

American Economic Review, March 2014

We empirically characterize the mechanics of trade adjustment during the Argentine crisis. Though imports collapsed by 70 percent from 2000-2002, the entry and exit of firms or products at the country level played a small role. The within-firm churning o...

Missing Import Price Changes and Low Exchange Rate Pass-Through

By Etienne Gagnon, Benjamin R. Mandel, and Robert J. Vigfusson

American Economic Journal: Macroeconomics, April 2014

A large body of empirical work has found that exchange rate movements have only modest effects on U.S. inflation. However, exchange rate pass-through may be underestimated because some price changes are missed when constructing price indexes. We invest...

Importers, Exporters, and Exchange Rate Disconnect

By Mary Amiti, Oleg Itskhoki, and Jozef Konings

American Economic Review, July 2014

Large exporters are simultaneously large importers. We show that this pattern is key to understanding low aggregate exchange rate pass-through as well as the variation in pass-through across exporters. We develop a theoretical framework with variable mark...

The Microeconomic Dimensions of the Eurozone Crisis and Why European Politics Cannot Solve Them

By Christian Thimann

Journal of Economic Perspectives, Summer 2015

The academic and policy debate about the crisis in Europe's single currency area is usually dominated by macroeconomic and public sector considerations. The microeconomic dimensions of the crisis and the private sector issues typically get much less att...

Exchange Rates, Interest Rates, and the Risk Premium

By Charles Engel

American Economic Review, February 2016

The uncovered interest parity puzzle concerns the empirical regularity that high interest rate countries tend to have high expected returns on short term deposits. A separate puzzle is that high real interest rate countries tend to have currencies that ar...

The Exchange Rate Response to Monetary Policy Innovations

By Viktoria Hnatkovska, Amartya Lahiri, and Carlos A. Vegh

American Economic Journal: Macroeconomics, April 2016

We present a new data fact: in response to a monetary tightening, the domestic currency tends to appreciate in developed countries but depreciate in developing countries. A model is developed to rationalize this contrasting pattern. It has three key chann...

Capital Flows: Expansionary or Contractionary?

By Olivier Blanchard, Jonathan D. Ostry, Atish R. Ghosh, and Marcos Chamon

American Economic Review, May 2016

The workhorse open-economy macro model suggests that capital inflows are contractionary because they appreciate the currency and reduce net exports. Emerging market policy makers, however, believe that inflows lead to credit booms and rising output; the e...