Performing Valid Inference with AI/ML-Generated Covariates: A Guide for Empirical Practice

By Timothy Christensen and Stephen Hansen

AEA Papers and Proceedings, May 2026

Researchers increasingly use AI and machine learning to generate variables that are used in regression analysis. Ignoring measurement error in these variables can yield biased estimators and invalid inference. The methods that exist for bias correction re...

A Preview of the Predict-Then-Debias Bootstrap

By Dan M. Kluger, Kerri Lu, Tijana Zrnic, Sherrie Wang, and Stephen Bates

AEA Papers and Proceedings, May 2026

Predictions from complex machine learning models are increasingly used as input data in subsequent statistical analyses, yet their errors can bias estimators and lead to invalid confidence intervals. Existing approaches attempt to remedy this issue but of...

Competitive Bank Liability Design

By Saki Bigio, Pierre-Olivier Weill, and Diego Zúñiga

AEA Papers and Proceedings, May 2026

We study how competitive banks design liabilities that function as money in an economy with asymmetric information. Assets differ in risk exposure, and sufficiently risky assets cannot circulate in decentralized trade. Banks commit to state-contingent pay...

Payment Risk and Bank Liquidity Management

By Ye Li and Yi Li

AEA Papers and Proceedings, May 2026

Banks are central to payment systems. As the rest of the economy transacts using deposits, liquidity is churned among banks. Using transaction-level data from Fedwire, we measure US banks' liquidity risk induced by depositors' payments. Despite the large ...

What Drives Money Competition: Comparative Advantage in Payments versus Reserves

By Itay Goldstein, Ming Yang, and Yao Zeng

AEA Papers and Proceedings, May 2026

We study competition between monies that provide separate payment and nonpayment (e.g., store-of-value) functions. Payment adoption is governed by comparative advantage across these two functions rather than by absolute payment superiority. A money that i...

Climate Change and Long-Run Factor Shares

By Tianzi Liu, Ivan Rudik, and Zebang Xu

AEA Papers and Proceedings, May 2026

What is the long-run effect of climate change on how income is distributed between capital and labor? To answer this question, we develop an equilibrium growth model with labor- and capital-augmenting productivities that are affected by changes in tempera...

Climate Policy and the Long-Run Interest Rate: Insights from a Simple Growth Model

By Gregory Casey, Stephie Fried, and William B. Peterman

AEA Papers and Proceedings, May 2026

We study the impact of climate policy on the long-run real interest rate in a neoclassical growth model. A carbon price reduces the long-run rate only if it grows faster than at least one fossil fuel price. Consider a carbon price that grows at 5 percent ...

Natural Disaster Expectations and Household Adaptation

By Shifrah Aron-Dine

AEA Papers and Proceedings, May 2026

How do households form expectations about the risk of future natural disasters, and how do these expectations translate into household adaptation choices? A stylized model of natural disasters yields predictions that higher perceived risk should increase ...

Persistent Impacts of Improved Apprenticeship Training Quality

By Morgan Hardy, Isaac Mbiti, and Jamie McCasland

AEA Papers and Proceedings, May 2026

Previous experimental research had shown that financial incentives to training providers could improve skill acquisition and earnings outcomes for trainees in an apprenticeship program in Ghana. However, it is unclear if these short-run impacts persist or...

Teacher Content Knowledge in Indian Secondary Schools and Its Relationship with Student Learning

By Sabrin Beg, Anne Fitzpatrick, Jason T. Kerwin, Adrienne Lucas, and Khandker Wahedur Rahman

AEA Papers and Proceedings, May 2026

We combine data on math and English teacher content knowledge with student test scores from secondary schools in India. We find that content knowledge is low, particularly for English. Education and experience are correlated with English content knowledge...

Beyond the Campus: Indirect Effects of University Openings in Uganda

By Tess Lallemant and Brian Dillon

AEA Papers and Proceedings, May 2026

Over the last two decades, the number of higher education institutions in low- and middle-income countries has grown rapidly. In this paper we study how the opening of a university affects employment and education outcomes in small cities across Uganda. W...

The Leaky College Pipeline: Evidence from Administrative Data in Uganda

By Isaac Ahimbisibwe, Adrien Dautheville, Lenka Fiala, Saint Kizito Omala, and Wayne Aaron Sandholtz

AEA Papers and Proceedings, May 2026

We use linked administrative data from Uganda to track student progression from primary school through university scholarship admission, documenting large leaks in the education pipeline at every stage. Many high-performing students from poorer districts ...

The Adoption of Industrial AI in America

By Kristina McElheran, Mu-Jeung Yang, Zachary Kroff, and Erik Brynjolfsson

AEA Papers and Proceedings, May 2026

Using a mandatory, purpose-designed Census Bureau survey of approximately 28,500 establishments, we provide new evidence on industrial AI adoption in US manufacturing. Despite widespread digitization, only 22.8 percent of plants report any AI use as of 20...

Generative AI: What Type of Technology?

By Martin Neil Baily, David M. Byrne, Aidan T. Kane, and Paul E. Soto

AEA Papers and Proceedings, May 2026

The economic effects of generative AI (genAI) will depend on the type of technology it ultimately represents. The impact on productivity growth of discrete innovations, such as the lightbulb, fades when the market saturates. General-purpose technologies (...

Aggregate Productivity Gains from Artificial Intelligence: A Sectoral Perspective

By Francesco Filippucci, Peter Gal, and Matthias Schief

AEA Papers and Proceedings, May 2026

Artificial intelligence raises productivity in specific tasks, but its aggregate impact remains debated. We project productivity gains from AI for 65 US industries and aggregate them in a multisector general-equilibrium framework, showing that AI could co...

AI as an Innovation in the Method of Innovation: Implications for Productivity Growth

By Filippo Bontadini, Carol Corrado, Jonathan Haskel, and Cecilia Jona-Lasinio

AEA Papers and Proceedings, May 2026

This paper estimates AI’s impact on labor productivity growth, treating AI as both a general-purpose technology and an innovation in the method of innovation. Using a framework that separates upstream innovation from downstream (other) production sugges...

American Investment in Chinese Renminbi

By Bruno Cavani, Christopher Clayton, Amanda Dos Santos, Matteo Maggiori, and Jesse Schreger

AEA Papers and Proceedings, May 2026

This paper uses microdata on US mutual fund and ETF portfolios from SEC Form N-PORT to study American investment in Chinese Renminbi (RMB)–denominated bonds. We show that, even as total foreign holdings of Chinese bonds rebounded in 2024, US holdings of...

Global Trade, Tariff Uncertainty, and the US Dollar

By Şebnem Kalemli-Özcan, Can Soylu, and Muhammed A. Yıldırım

AEA Papers and Proceedings, May 2026

We analyze how tariff uncertainty affects exchange rates, motivated by the US dollar’s depreciation after the 2025 tariff announcements. Standard macrotrade models predict that unilateral tariffs appreciate the implementing country’s currency, but we ...

Stablecoins and the Dollar: Historical Parallels and Future Risks

By Max Harris and Kenneth Rogoff

AEA Papers and Proceedings, May 2026

Stablecoins have burst onto the scene, offering the potential for cheaper, faster, and smarter payments—perhaps even strengthened dollar dominance. Yet, for all the novel technology, stablecoins present a host of age-old risks that caution against such ...

The Mysterious Disappearance of Productivity Growth in US Manufacturing: Was It the China Shock?

By Robert J. Gordon and Kenneth Ryu

AEA Papers and Proceedings, May 2026

After registering a 3 percent annual rate from 1948 to 2010, the growth of labor productivity in US manufacturing since 2010 has come to a cold stop, with a zero 2010–2025 annual growth rate. What caused the disappearance of productivity growth in the c...