Leveling the Playing Field: Sincere and Sophisticated Players in the Boston Mechanism

By Parag A. Pathak and Tayfun Sönmez

American Economic Review, September 2008

Empirical and experimental evidence suggests different levels of sophistication among families in the Boston Public School student assignment plan. We analyze the preference revelation game induced by the Boston mechanism with sincere players who report t...

People Flows in Globalization

By Richard B. Freeman

Journal of Economic Perspectives, Spring 2006

The policy debate over globalization in the past decade has largely bypassed the international mobility of labor. Restrict trade and cries of protectionism resound. Suggest linking labor standards to trade and it's protectionism in disguise. Limit capital...

Capturing Knowledge within and across Firm Boundaries: Evidence from Clinical Development

By Pierre Azoulay

American Economic Review, December 2004

How do firm boundaries influence employees' acquisition of information? Using detailed project-level data and qualitative evidence, I document that pharmaceutical firms are more likely to outsource the coordination of data-intensive clinical trials, while...

Does School Integration Generate Peer Effects? Evidence from Boston's Metco Program

By Joshua D. Angrist and Kevin Lang

American Economic Review, December 2004

The Metropolitan Council for Educational Opportunity (Metco) is a desegregation program that sends students from Boston schools to more affluent suburbs. Metco increases the number of blacks and reduces test scores in receiving districts. School-level dat...

International Protection of Intellectual Property

By Gene M. Grossman and Edwin L.-C. Lai

American Economic Review, December 2004

We study the incentives that governments have to protect intellectual property in a trading world economy. We consider a world economy with ongoing innovation in two countries that differ in market size and in their capacity for innovation. After describi...

Why Parents Play Favorites: Explanations for Unequal Bequests

By Audrey Light and Kathleen McGarry

American Economic Review, December 2004

Partnership Firms, Reputation, and Human Capital

By Alan D. Morrison and William J. Wilhelm Jr

American Economic Review, December 2004

The Cyclical Behavior of Equilibrium Unemployment and Vacancies

By Robert Shimer

American Economic Review, March 2005

This paper argues that the textbook search and matching model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies in response to shocks of a plausible magnitude. In the United States, the standard deviation...

Financial Reform: What Shakes It? What Shapes It?

By Abdul Abiad and Ashoka Mody

American Economic Review, March 2005

What accounts for the worldwide advance of financial reforms in the last quarter century? Using a new index of financial liberalization, we find that influential events shook the policy status quo. Balance-of-payments crises spurred reforms, but banking c...

Optimal Monetary Policy with Relative Price Distortions

By Tack Yun

American Economic Review, March 2005

This paper analyzes optimal monetary policy in a sticky price model with Calvo-type staggered price-setting. In the paper, the optimal monetary policy maximizes the expected utility of a representative household without having to rely on a set of linearly...

The Case for Open-Market Purchases in a Liquidity Trap

By Alan J. Auerbach and Maurice Obstfeld

American Economic Review, March 2005

Prevalent thinking about liquidity traps suggests that the perfect substitutability of money and bonds at a zero short-term nominal interest rate renders open-market operations ineffective for achieving macroeconomic stabilization goals. We show that even...

Wealth as a Determinant of Comparative Advantage

By José Wynne

American Economic Review, March 2005

This paper shows that a country's wealth can be an important determinant of comparative advantage when access to credit differs across sectors of the economy. Wealthier nations exhibit a comparative advantage toward goods produced in sectors facing more s...

Extracting Inflation from Stock Returns to Test Purchasing Power Parity

By Bhagwan Chowdhry, Richard Roll, and Yihong Xia

American Economic Review, March 2005

Relative purchasing power parity (PPP) holds for pure price inflations, which affect prices of all goods and services by the same proportion, while leaving relative prices unchanged. Pure price inflations also affect nominal returns of all traded financia...

The Quantity and Quality of Life and the Evolution of World Inequality

By Gary S. Becker, Tomas J. Philipson, and Rodrigo R. Soares

American Economic Review, March 2005

GDP per capita is usually used to proxy for the quality of life of individuals living in different countries. Welfare is also affected by quantity of life, however, as represented by longevity. This paper incorporates longevity into an overall assessment ...

Distance, Time, and Specialization: Lean Retailing in General Equilibrium

By Carolyn L. Evans and James Harrigan

American Economic Review, March 2005

Transport time increases with distance traveled, and time is valuable. We show the implications of these facts for global specialization and trade: products where timely delivery is important will be produced near the source of final demand, where wages w...

How to Protect Future Generations Using Tax-Base Restrictions

By Antonio Rangel

American Economic Review, March 2005

This paper studies how to protect future generations from expropriation and to induce optimal investment in intergenerational public goods (IPGs), by introducing constitutional restrictions on the tax base. The type of tax-base restrictions that we consid...

Complementarities between Outsourcing and Foreign Sourcing

By Gene M. Grossman, Elhanan Helpman, and Adam Szeidl

American Economic Review, May 2005

Property Rights and the International Organization of Production

By Pol Antràs

American Economic Review, May 2005

Foreign Direct Investment and the Domestic Capital Stock

By Mihir A. Desai, C. Fritz Foley, and James R. Hines Jr.

American Economic Review, May 2005

Federalism and the Democratic Transition: Lessons from South Africa

By Robert P. Inman and Daniel L. Rubinfeld

American Economic Review, May 2005