Weak States and Steady States: The Dynamics of Fiscal Capacity

By Timothy Besley, Ethan Ilzetzki, and Torsten Persson

American Economic Journal: Macroeconomics, October 2013

Investments in fiscal capacity—economic institutions for tax compliance—are an important feature of economic development. This paper develops a dynamic model to study the evolution of fiscal capacity over time. We contrast a social planner's investm...

An Accountant among Economists: Conservations with Sir John R. Hicks

By Arjo Klamer

Journal of Economic Perspectives, Fall 1989

Sir John Hicks (1904-1989) has left an indelible impression on modern economic discourse. His Value and Capital (1939) stood as a model for neoclassical microeconomics as economists know it today. His condensation of Keynes's General Theory in the form o...

Putting Risk in Its Proper Place

By Louis Eeckhoudt and Harris Schlesinger

American Economic Review, March 2006

This paper examines preferences toward particular classes of lottery pairs. We show how such concepts as prudence and temperance can be fully characterized by a preference relation over these lotteries. If preferences are defined in an expected-utility fr...

Referrals

By Luis Garicano and Tano Santos

American Economic Review, June 2004

This paper studies the matching of opportunities with talent when costly diagnosis confers an informational advantage to the agent undertaking it. When this agent is underqualified, adverse selection prevents efficient referrals through fixed-price contra...

Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects

By Sascha O. Becker, Peter H. Egger, and Maximilian von Ehrlich

American Economic Journal: Economic Policy, November 2013

Researchers often estimate average treatment effects of programs without investigating heterogeneity across units. Yet, individuals, firms, regions, or countries vary in their ability to utilize transfers. We analyze Objective 1 transfers of the EU to ...

Reference Points and Effort Provision

By Johannes Abeler, Armin Falk, Lorenz Goette, and David Huffman

American Economic Review, April 2011

A key open question for theories of reference-dependent preferences is: what determines the reference point? One candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment, we manipulat...

School Quality and the Gender Gap in Educational Achievement

By David Autor, David Figlio, Krzysztof Karbownik, Jeffrey Roth, and Melanie Wasserman

American Economic Review, May 2016

Recent evidence indicates that boys and girls are differently affected by the quantity and quality of family inputs received in childhood. We assess whether this is also true for schooling inputs. Using matched Florida birth and school administrative reco...

Comparing Real Wage Rates: Presidential Address

By Orley Ashenfelter

American Economic Review, April 2012

A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of worker...

Pricing-to-Market, Trade Costs, and International Relative Prices

By Andrew Atkeson and Ariel Burstein

American Economic Review, December 2008

International relative prices across industrialized countries show large and systematic deviations from relative purchasing power parity. We embed a model of imperfect competition and variable markups in a quantitative model of international trade. We ...

Let Them Have Choice: Gains from Shifting Away from Employer-Sponsored Health Insurance and toward an Individual Exchange

By Leemore Dafny, Kate Ho, and Mauricio Varela

American Economic Journal: Economic Policy, February 2013

Most nonelderly Americans purchase health insurance through their employers, which sponsor a limited number of plans. Using a panel dataset representing over ten million insured lives, we estimate employees' preferences for different health plans and us...

Identifying the Effects of Bank Failures from a Natural Experiment in Mississippi during the Great Depression

By Nicolas L. Ziebarth

American Economic Journal: Macroeconomics, January 2013

I examine the causal effect of bank failures during the Great Depression using the quasi-experimental setup of Richardson and Troost (2009). The experiment is based on Mississippi being divided into two Federal Reserve districts, which followed differe...

Untitled Land, Occupational Choice, and Agricultural Productivity

By Chaoran Chen

American Economic Journal: Macroeconomics, October 2017

The prevalence of untitled land in poor countries helps explain the international agricultural productivity differences. Since untitled land cannot be traded across farmers, it creates land misallocation and distorts individuals' occupational choice betwe...

The Cyclical Behavior of Debt and Equity Finance

By Francisco Covas and Wouter J. Den Haan

American Economic Review, April 2011

Debt and equity issuance are procyclical for most size-sorted firm categories of listed US firms and the procyclicality of equity issuance decreases monotonically with firm size. At the aggregate level, however, the results for equity issuance are not con...

Government Form and Public Spending: Theory and Evidence from US Municipalities

By Stephen Coate and Brian Knight

American Economic Journal: Economic Policy, August 2011

There are two main forms of government in US cities: council-manager and mayor-council. This paper develops a theory of fiscal policy determination under these two forms. The theory predicts that expected public spending will be lower under mayor-council ...

Policy Watch: Economics and the Clean Air Act

By Paul R. Portney

Journal of Economic Perspectives, Fall 1990

The Clean Air Act, arguably the nation's most important environmental statute, is sure to be amended by the 101st Congress. In neither its current nor its likely new form does the Act feature much of a role for economic considerations. In fact, one approa...

Task Specialization, Immigration, and Wages

By Giovanni Peri and Chad Sparber

American Economic Journal: Applied Economics, July 2009

Large inflows of less educated immigrants may reduce wages paid to comparably-educated, native-born workers. However, if less educated foreign- and native-born workers specialize in different production tasks, because of different abilities, immigratio...

Undergraduate Econometrics Instruction: Through Our Classes, Darkly

[Symposium: Recent Ideas in Econometrics]

By Joshua D. Angrist and Jörn-Steffen Pischke

Journal of Economic Perspectives, Spring 2017

The past half-century has seen economic research become increasingly empirical, while the nature of empirical economic research has also changed. In the 1960s and 1970s, an empirical economist's typical mission was to "explain" economic variables like wag...

Policy Uncertainty, Trade, and Welfare: Theory and Evidence for China and the United States

By Kyle Handley and Nuno Limão

American Economic Review, September 2017

We examine the impact of policy uncertainty on trade, prices, and real income through firm entry investments in general equilibrium. We estimate and quantify the impact of trade policy on China's export boom to the United States following its 2001 WTO acc...

Imperfect Competition in the Interbank Market for Liquidity as a Rationale for Central Banking

By Viral V. Acharya, Denis Gromb, and Tanju Yorulmazer

American Economic Journal: Macroeconomics, April 2012

We study interbank lending and asset sales markets in which banks with surplus liquidity have market power vis-à-vis banks needing liquidity, frictions arise in lending due to moral hazard, and assets are bank-specific. Surplus banks ration lending...

The Pragmatist's Guide to Comparative Effectiveness Research

[Symposium: Constraining Healthcare Costs]

By Amitabh Chandra, Anupam B. Jena, and Jonathan S. Skinner

Journal of Economic Perspectives, Spring 2011

Following an acrimonious healthcare reform debate involving charges of "death panels," in 2010, Congress explicitly forbade the use of cost-effectiveness analysis in government programs of the Patient Protection and Affordable Care Act. In this context, ...