Welfare and Trade without Pareto

By Keith Head, Thierry Mayer, and Mathias Thoenig

American Economic Review, May 2014

Quantifications of gains from trade in heterogeneous firm models assume that productivity is Pareto distributed. Replacing this assumption with log-normal heterogeneity retains some useful Pareto features, while providing a substantially better fit to sal...

Is the U.S. Labor Market Really That Exceptional? A Review of Richard Freeman

By Stephen Nickell

Journal of Economic Literature, June 2008

America Works is a splendid book and Richard Freeman is to be congratulated on producing a work that sets out what is right and what is wrong with the U.S. labor market while being a joy to read. While I am generally sympathetic to both the analysis an...

Anomalous Behavior in a Traveler's Dilemma?

By C. Monica Capra, Jacob K. Goeree, Rosario Gomez, and Charles A. Holt

American Economic Review, June 1999

Productivity and Postwar U.S. Economic Growth

[Symposium: The Slowdown in Productivity Growth]

By Dale W. Jorgenson

Journal of Economic Perspectives, Fall 1988

The purpose of this paper is to analyze the sources of postwar U.S. economic growth. The findings presented here allocate more than three-fourths of U.S. economic growth during the period 1948-1979 to growth of capital and labor inputs and less than one-f...

Ideology as Opinion: A Spatial Model of Common-Value Elections

By Joseph McMurray

American Economic Journal: Microeconomics, November 2017

Spatial election literature attributes voters' political differences to irreconcilable conflicts of interest. Alternatively, voters may merely hold differing beliefs regarding which policies best promote the public interest, as in the classic common-value...

Technical Change, Inequality, and the Labor Market

By Daron Acemoglu

Journal of Economic Literature, March 2002

This essay discusses the effect of technical change on wage inequality. I argue that the behavior of wages and returns to schooling indicates that technical change has been skill-biased during the past sixty years. Furthermore, the recent increase in ineq...

Monetary, Credit and (Other) Transmission Processes: A Monetarist Perspective

[Symposium: The Monetary Transmission Mechanism]

By Allan H. Meltzer

Journal of Economic Perspectives, Fall 1995

Monetarist analysis of the transmission process highlights the response of relative prices and real wealth to monetary (and other) impulses. Monetary impulses are neutral in the long run. Short-run nonneutrality reflects uncertainty, incomplete informatio...

The Value of Information in the Court: Get It Right, Keep It Tight

By Matias Iaryczower and Matthew Shum

American Economic Review, February 2012

We estimate an equilibrium model of decision making in the US Supreme Court that takes into account both private information and ideological differences between justices. We measure the value of information in the court by the probability that a justice ...

The Trouble with Stock Options

[Symposium: Stock Options]

By Brian J. Hall and Kevin J. Murphy

Journal of Economic Perspectives, Summer 2003

The benefits of stock options are often not large enough to offset the inefficiency implied by the large divergence between the cost of options to companies and the value of options to risk-averse, undiversified executives and employees. Moreover, the ben...

Resale Price Maintenance with Secret Contracts and Retail Service Externalities

By Tommy Staahl Gabrielsen and Bjørn Olav Johansen

American Economic Journal: Microeconomics, February 2017

We analyze a setting where a monopolist sells through retailers that set prices and provide valuable but non-contractible services to customers. We assume that contracts are private. We find that purely bilateral price restraints have no effect on the equ...

JEL Classification System

Journal of Economic Literature, December 2008

The Three Arab Worlds

By James E. Rauch and Scott Kostyshak

Journal of Economic Perspectives, Summer 2009

Given the attention currently focused on the Arab world in part as a result of adjustments in U.S. foreign policy, a fresh look at Arab socioeconomic performance is in order. The Arab world is defined by language rather than ethnicity. The League of Arab ...

US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms

By Rema Hanna

American Economic Journal: Applied Economics, July 2010

This paper measures the response of US-based multinationals to the Clean Air Act Amendments (CAAA). Using a panel of firm-level data over the period 1966-1999, I estimate the effect of regulation on a multinational's foreign production decisions. The CAAA...

Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market

By Severin Borenstein, James B. Bushnell, and Frank A. Wolak

American Economic Review, December 2002

We present a method for decomposing wholesale electricity payments into production costs, inframarginal competitive rents, and payments resulting from the exercise of market power. Using data from June 1998 to October 2000 in California, we find significa...

Understanding Trend and Cycle in Asset Values: Reevaluating the Wealth Effect on Consumption

By Martin Lettau and Sydney C. Ludvigson

American Economic Review, March 2004

Rewriting Monetary Policy 101: What's the Fed's Preferred Post-Crisis Approach to Raising Interest Rates?

By Jane E. Ihrig, Ellen E. Meade, and Gretchen C. Weinbach

Journal of Economic Perspectives, Fall 2015

For many years prior to the global financial crisis, the Federal Open Market Committee set a target for the federal funds rate and achieved that target through small purchases and sales of securities in the open market. In the aftermath of the finan...

Why Does Misallocation Persist?

By Abhijit V. Banerjee and Benjamin Moll

American Economic Journal: Macroeconomics, January 2010

Recent papers argue that the misallocation of resources can explain large cross-country TFP differences. This argument is underpinned by empirical evidence documenting substantial dispersion in the marginal products of resources, particularly capital, in ...

Electronic Trading in Stock Markets

By Hans R. Stoll

Journal of Economic Perspectives, Winter 2006

Modern trading technology clashes with the traditional organization of a stock exchange, where transactions were consummated via face-to-face negotiation. The modern trading facility is no longer a place. Rather, it is a computer system over which transac...

Trade Liberalization and Markup Dispersion: Evidence from China's WTO Accession

By Yi Lu and Linhui Yu

American Economic Journal: Applied Economics, October 2015

In this paper, we empirically investigate whether trade liberalization affects markup dispersion, a potential source of resource misallocation. The identification uses China's WTO accession at the end of 2001. We show that trade liberalization reduces mar...

On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy

By Louis Kaplow

Journal of Economic Perspectives, Fall 2004

Should the assessment of government policies, such as the provision of public goods and the control of externalities, deviate from first-best principles to account for distributive effects and the distortionary cost of labor income taxation? For example, ...