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 Effect of Migration on Wages: Evidence from a Natural Experiment

By Dakshina G. De Silva, Robert P. McComb, Young-Kyu Moh, Anita R. Schiller, and Andres J. Vargas

American Economic Review, May 2010

Labor Markets and Monetary Policy: A New Keynesian Model with Unemployment

By Olivier Blanchard and Jordi Galí

American Economic Journal: Macroeconomics, April 2010

We construct a utility-based model of fluctuations with nominal rigidities and unemployment. We first show that under a standard utility specification, productivity shocks have no effect on unemployment in the constrained efficient allocation. That pro...

The Welfare Effects of Bundling in Multichannel Television Markets

By Gregory S. Crawford and Ali Yurukoglu

American Economic Review, April 2012

We measure how the bundling of television channels affects short-run welfare. We estimate an industry model of viewership, demand, pricing, bundling, and input-market bargaining using data on ratings, purchases, prices, bundles, and input costs. We condu...

Reaching Equilibrium in the Market for Obstetricians and Gynecologists

By Jessica Wolpaw Reyes

American Economic Review, May 2007

Medical Care Costs: How Much Welfare Loss?

[Symposium: Health Economics]

By Joseph P. Newhouse

Journal of Economic Perspectives, Summer 1992

Hardly a week goes by without a front-page newspaper article on rising health care costs and the uninsured. In this article, I focus mainly on costs, arguing that the issue has been somewhat misconceived: while the level of medical care spending in the U....

Tracing the Woes: An Empirical Analysis of the Airline Industry

By Steven Berry and Panle Jia

American Economic Journal: Microeconomics, August 2010

The US airline industry went through tremendous turmoil in the early 2000s, with four major bankruptcies, two major mergers, and various changes in network structure. This paper presents a structural model of the industry, and estimates the impact of dema...

Tagging and Income Taxation: Theory and an Application

By Helmuth Cremer, Firouz Gahvari, and Jean-Marie Lozachmeur

American Economic Journal: Economic Policy, February 2010

We derive a set of analytical results for optimal income taxation with tags using quasilinear preferences and a Rawlsian social welfare function. Secondly, assuming a constant elasticity of labor supply and log-normality of the skills distribution, we ...

The Stock Market Boom and Crash of 1929 Revisited

[Symposium: Bubbles]

By Eugene N. White

Journal of Economic Perspectives, Spring 1990

This paper will sort through many of the hypotheses offered to explain the 1929 boom and bust. Most of the factors cited by historians played trivial or insignificant roles. The central issue is whether fundamentals or a bubble drove the bull market upwar...

Symposium on Bubbles

[Symposium: Bubbles]

By Joseph E. Stiglitz

Journal of Economic Perspectives, Spring 1990

The papers in this symposium represent the divergent views of economists on an important issue: the extent to which prices of assets represent "fundamental" values. While the papers in the symposium present different formal definitions of what a bubble is...

Inflation Targeting: A New Framework for Monetary Policy?

By Ben S. Bernanke and Frederic S. Mishkin

Journal of Economic Perspectives, Spring 1997

In recent years, a number of industrialized countries have adopted a strategy for monetary policy known as 'inflation targeting.' The authors describe how this approach has been implemented in practice and argue that it is best understood as a broad frame...

News Shocks and the Slope of the Term Structure of Interest Rates: Reply

By André Kurmann and Christopher Otrok

American Economic Review, October 2017

This reply to Cascaldi-Garcia's (2017) comment argues that by using the original code of Kurmann and Otrok (2013) with new data on utilization-adjusted TFP, Cascaldi-Garcia (2017) confounds positive and negative news shocks. With a small modification to t...

Competition and the Strategic Choices of Churches

By Adam D. Rennhoff and Mark F. Owens

American Economic Journal: Microeconomics, August 2012

We examine how the decisions of churches are impacted by the decisions of rival churches. Using a novel dataset, we estimate a model of strategic interaction, which accounts for the location and denomination of churches. We focus on a church's decision of...

Educational Debt Burden and Career Choice: Evidence from a Financial Aid Experiment at NYU Law School

By Erica Field

American Economic Journal: Applied Economics, January 2009

This paper examines the influence of psychological responses to debt on career choices from an experiment in which alternative financial aid packages were assigned by lottery to a set of law school admits. The packages had equivalent monetary value, bu...

The Doctor Might See You Now: The Supply Side Effects of Public Health Insurance Expansions

By Craig L. Garthwaite

American Economic Journal: Economic Policy, August 2012

In the United States, public health insurance programs cover over 90 million individuals. Expansions of these programs, such as the recently passed Patient Protection and Affordable Care Act (PPACA), may have large effects on physician behavior. This stud...

Speculative Bubbles and Financial Crises

By Pengfei Wang and Yi Wen

American Economic Journal: Macroeconomics, July 2012

Are asset prices unduly volatile and often detached from their fundamentals? Does the bursting of financial bubbles depress the real economy? This paper addresses these issues by constructing a DSGE model with speculative bubbles. We characterize conditi...

Managing Local Commons: Theoretical Issues in Incentive Design

[Symposium]

By Paul Seabright

Journal of Economic Perspectives, Fall 1993

Local commons encompass a wide range of resources whose shared feature is the need for some form of collective management. In what follows, we shall be concerned mainly with the problems of implementing a collective management plan. Whatever the mechanism...

Option Awareness: The Psychology of What We Consider

By Anuj K. Shah and Jens Ludwig

American Economic Review, May 2016

The standard economic view suggests that people will commit an action if its expected benefits outweigh its costs. But before people weigh the costs and benefits of an action, what affects whether they think of the action in the first place? We argue that...

Network Structure and the Aggregation of Information: Theory and Evidence from Indonesia

By Vivi Alatas, Abhijit Banerjee, Arun G. Chandrasekhar, Rema Hanna, and Benjamin A. Olken

American Economic Review, July 2016

We use unique data from over 600 Indonesian communities on what individuals know about the poverty status of others to study how network structure influences information aggregation. We develop a model of semi-Bayesian learning on networks, which we struc...

Self-Enforcing Contracts, Shirking, and Life Cycle Incentives

[Symposium: Seniority and Wages]

By H. Lorne Carmichael

Journal of Economic Perspectives, Fall 1989

The labor market is a rich and complicated place. When a worker takes a job he expects to earn a wage, but will also care about rates of wage growth, fringe benefits, levels of risk, retirement practices, pensions, promotion and layoff rules, seniority ri...