Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850–1920

By James Feigenbaum, James Lee, and Filippo Mezzanotti

American Economic Journal: Applied Economics, October 2022

Using General Sherman's March through Georgia, South Carolina, and North Carolina during the Civil War, we study the effect of capital destruction on medium- and long-run local economic activity, and the role of financial markets in recovery. We show that...

The Health Effects of Prison

By Randi Hjalmarsson and Matthew J. Lindquist

American Economic Journal: Applied Economics, October 2022

This paper studies the health effects of Swedish prison reforms that held sentences constant but increased the share of time inmates had to serve. The increased time served did not harm post-release health and actually reduced mortality risk. We find espe...

Why Is Europe More Equal than the United States?

By Thomas Blanchet, Lucas Chancel, and Amory Gethin

American Economic Journal: Applied Economics, October 2022

This article combines all available data to produce pretax and posttax income inequality series in 26 European countries from 1980 to 2017. Our estimates are consistent with macroeconomic growth and comparable with US distributional national accounts. Ine...

Competition and Pass-Through: Evidence from Isolated Markets

By Christos Genakos and Mario Pagliero

American Economic Journal: Applied Economics, October 2022

We measure how pass-through varies with competition in isolated oligopolistic markets with captive consumers. Using daily pricing data from gas stations on small Greek islands, we study how unanticipated and exogenous changes in excise duties are passed t...

Pathways into Opioid Dependence: Evidence from Practice Variation in Emergency Departments

By Sarah Eichmeyer and Jonathan Zhang

American Economic Journal: Applied Economics, October 2022

We use practice variation across physicians to uncover the role of medical care in causing opioid dependence. Using health records of 2 million US veterans with emergency department visits, we find that quasi-random assignment to a top (versus bottom) dec...

The Impact of Presidential Appointment of Judges: Montesquieu or the Federalists?

By Sultan Mehmood

American Economic Journal: Applied Economics, October 2022

A central question in development economics is whether there are adequate checks and balances on the executive. This paper provides causal evidence of how increasing constraints on the executive—via removal of presidential discretion in judicial appoint...

Is Zero a Special Price? Evidence from Child Health Care

By Toshiaki Iizuka and Hitoshi Shigeoka

American Economic Journal: Applied Economics, October 2022

Do consumers react differently to zero prices? We test the presence of a zero-price effect in child health care and find that a zero price is special as it boosts demand discontinuously. A zero price affects resource allocations by encouraging healthier c...

Front Matter

American Economic Review, October 2022

Persistent Overconfidence and Biased Memory: Evidence from Managers

By David Huffman, Collin Raymond, and Julia Shvets

American Economic Review, October 2022

A long-standing puzzle is how overconfidence can persist in settings characterized by repeated feedback. This paper studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Using r...

Reference Dependence in the Housing Market

By Steffen Andersen, Cristian Badarinza, Lu Liu, Julie Marx, and Tarun Ramadorai

American Economic Review, October 2022

We quantify reference dependence and loss aversion in the housing market using rich Danish administrative data. Our structural model includes loss aversion, reference dependence, financial constraints, and a sale decision, and matches key nonparametric mo...

Fake News, Voter Overconfidence, and the Quality of Democratic Choice

By Melis Kartal and Jean-Robert Tyran

American Economic Review, October 2022

This paper studies, theoretically and experimentally, the effects of overconfidence and fake news on information aggregation and the quality of democratic choice in a common-interest setting. We theoretically show that overconfidence exacerbates the adver...

Credit, Attention, and Externalities in the Adoption of Energy Efficient Technologies by Low-Income Households

By Susanna B. Berkouwer and Joshua T. Dean

American Economic Review, October 2022

We study an energy efficient charcoal cookstove in an experiment with 1,000 households in Nairobi. We estimate a 39 percent reduction in charcoal spending, which matches engineering estimates, generating a 295 percent annual return. Despite fuel savings o...

Demagogues and the Economic Fragility of Democracies

By Dan Bernhardt, Stefan Krasa, and Mehdi Shadmehr

American Economic Review, October 2022

We investigate the susceptibility of democracies to demagogues, studying tensions between representatives who guard voters' long-run interests and demagogues who cater to voters' short-run desires. Parties propose consumption and investment. Voters base c...

Posterior Separable Cost of Information

By Tommaso Denti

American Economic Review, October 2022

We provide testable conditions under which the cost of acquiring information is given by the expected reduction of a measure of uncertainty (e.g., entropy). The assumption, under the name of posterior separability, is nearly universal in the literature of...

Valid t-Ratio Inference for IV

By David S. Lee, Justin McCrary, Marcelo J. Moreira, and Jack Porter

American Economic Review, October 2022

In the single-IV model, researchers commonly rely on t-ratio-based inference, even though the literature has quantified its potentially severe large-sample distortions. Building on Stock and Yogo (2005), we introduce the tF critical valu...

Front Matter

American Economic Journal: Macroeconomics, October 2022

News Shocks under Financial Frictions

By Christoph Görtz, John D. Tsoukalas, and Francesco Zanetti

American Economic Journal: Macroeconomics, October 2022

We examine the dynamic effects of TFP news shocks in the context of frictions in financial markets. We document two new facts. First, a shock to future TFP generates a significant decline in credit spread indicators along with a robust improvement in cred...