Housing Constraints and Spatial Misallocation: Comment

By Brian Greaney

American Economic Journal: Macroeconomics, April 2026

Hsieh and Moretti (2019) find that relaxing land use regulations in three productive US cities would increase GDP by 3.7 percent. In this comment, I revisit their findings. I first attempt to replicate their result and find that their counterfactual would...

Partial Specialization and Heterogeneous Task Assignments

By Chen Liu

American Economic Journal: Macroeconomics, April 2026

I develop a general equilibrium model featuring multidimensional skills and partial specialization in tasks to quantify the impact of several determinants on within-occupation inequality growth from 1980 to 2000. The model introduces a new mechanism by wh...

Inflation Targeting under Fiscal Fragility

By Aloisio Araujo, Vitor Costa, Paulo Lins, Rafael Santos, and Serge de Valk

American Economic Journal: Macroeconomics, April 2026

We propose a model to study an inflation-targeting regime under a high government debt burden. We assume that an altruistic policymaker chooses debt issuance, inflation, and public expenditure, while private agents dislike inflation and finance the govern...

Optimism about Graduation and College Financial Aid

By Emily G. Moschini, Gajendran Raveendranathan, and Ming Xu

American Economic Journal: Macroeconomics, April 2026

In the United States, college dropout risk is sizable. We provide new empirical evidence that beliefs about the likelihood of earning a bachelor's degree predict college enrollment, and that the distribution of these beliefs exhibits widespread optimism. ...

Not a Typical Firm: Capital–Labor Substitution and Firms' Labor Shares

By Joachim Hubmer and Pascual Restrepo

American Economic Journal: Macroeconomics, April 2026

The US labor share has declined, especially in manufacturing and retail. Yet the labor share of a typical firm in these sectors has risen. We introduce a model where firms incur fixed costs to automate tasks. A decline in the price of capital goods used f...

Management and Misallocation in Mexico

By Nicholas Bloom, Leonardo Iacovone, Mariana Pereira-López, and John Van Reenen

American Economic Journal: Macroeconomics, April 2026

Using comprehensive administrative management surveys from Mexico and the United States, we document large management gaps between the two countries, driven by both lower average management quality among Mexican firms and greater misallocation. Compared w...

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Front Matter

American Economic Review, April 2026

A Long and a Short Leg Make for a Wobbly Equilibrium

By Nicolae Gârleanu, Stavros Panageas, and Geoffery Zheng

American Economic Review, April 2026

We provide a model to explain how the interaction between the spot and lending markets for stocks can lead to abrupt changes in short selling activity. Furthermore, rational short sellers may choose to abandon the market even as mispricing widens. We docu...

Real Credit Cycles

By Pedro Bordalo, Nicola Gennaioli, Andrei Shleifer, and Stephen J. Terry

American Economic Review, April 2026

We embed diagnostic expectations in a workhorse neoclassical model with heterogeneous firms and risky debt. A realistic degree of overreaction estimated from US firms' earnings forecasts generates realistic credit cycles. Good times produce economic and f...

Market Power and Capital Constraints

By Milena Wittwer and Jason Allen

American Economic Review, April 2026

We explore how traders' equity capitalization influences asset prices in a framework that accounts for market power. In our model, traders with capital constraints engage in transactions in an imperfectly competitive market. We demonstrate that looser cap...

Robust Misspecified Models

By Cuimin Ba

American Economic Review, April 2026

This paper studies which misspecified models are likely to persist when decision-makers compare them with competing models. The main result characterizes such models based on two features that can be derived from primitives: The model's asymptotic accurac...

Negative Control Falsification Tests for Instrumental Variable Designs

By Oren Danieli, Daniel Nevo, Itai Walk, Bar Weinstein, and Dan Zeltzer

American Economic Review, April 2026

The validity of instrumental variable (IV) designs is typically tested using two types of falsification tests. We characterize these tests as conditional independence tests between negative control variables—proxies for unobserved variables posing a thr...

Games on Multiplex Networks

By Yves Zenou and Junjie Zhou

American Economic Review, April 2026

We develop a simple multilayer network model in which agents allocate effort across layers with heterogeneous structures, subject to an aggregate effort constraint. Incentives are shaped by agents' network positions within each layer, and equilibrium beha...

Spillovers in State Capacity Building: Evidence from the Digitization of Land Records in Pakistan

By Shan Aman-Rana and Clement Minaudier

American Economic Review, April 2026

Digitization reforms have been hailed as an effective way of strengthening state capacity. However, digitization can also fundamentally reshape the organization of bureaucracies. Using a unique administrative dataset on agricultural taxation and surveys o...

Similarity of Information and Collective Action

By Deepal Basak, Joyee Deb, and Aditya Kuvalekar

American Economic Review, April 2026

We study a canonical collective action game with incomplete information. Individuals attempt to coordinate to achieve a shared goal, while also facing a temptation to free-ride. More similar information can help them coordinate, but it can also exacerbate...

Abundance from Abroad: Migrant Income and Long-Run Economic Development

By Gaurav Khanna, Emir Murathanoglu, Caroline Theoharides, and Dean Yang

American Economic Review, April 2026

We study how international migrant income prospects affect long-run development in origin areas. We leverage the 1997 Asian Financial Crisis exchange rate shocks in a shift-share identification strategy across Philippine provinces. Initial migrant income ...

Making Bricks from Straw: Resources and Productivity in Health Care

By Edward N. Okeke

American Economic Review, April 2026

Why do health facilities in developing countries do so poorly? This paper examines the role of financial constraints. I describe an experiment in which we surprised health workers in randomly selected public health clinics in Nigeria with a ₦600,000 gra...

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