Front Matter

American Economic Review, September 2020

Household Debt Revaluation and the Real Economy: Evidence from a Foreign Currency Debt Crisis

By Emil Verner and Győző Gyöngyösi

American Economic Review, September 2020

We examine the consequences of a sudden increase in household debt burdens by exploiting variation in exposure to household foreign currency debt during Hungary's late-2008 currency crisis. The revaluation of debt burdens causes higher default rates and a...

Rich Pickings? Risk, Return, and Skill in Household Wealth

By Laurent Bach, Laurent E. Calvet, and Paolo Sodini

American Economic Review, September 2020

We investigate wealth returns on an administrative panel containing the disaggregated balance sheets of Swedish residents. The expected return on household net wealth is strongly persistent, determined primarily by systematic risk, and increasing in net w...

Overreaction in Macroeconomic Expectations

By Pedro Bordalo, Nicola Gennaioli, Yueran Ma, and Andrei Shleifer

American Economic Review, September 2020

We study the rationality of individual and consensus forecasts of macroeconomic and financial variables using the methodology of Coibion and Gorodnichenko (2015), who examine predictability of forecast errors from forecast revisions. We find that individu...

Self-Fulfilling Debt Dilution: Maturity and Multiplicity in Debt Models

By Mark Aguiar and Manuel Amador

American Economic Review, September 2020

We establish that creditor beliefs regarding future borrowing can be self-fulfilling, leading to multiple equilibria with markedly different debt accumulation patterns. We characterize such indeterminacy in the Eaton-Gersovitz sovereign debt model augment...

Nonrivalry and the Economics of Data

By Charles I. Jones and Christopher Tonetti

American Economic Review, September 2020

Data is nonrival: a person's location history, medical records, and driving data can be used by many firms simultaneously. Nonrivalry leads to increasing returns. As a result, there may be social gains to data being used broadly across firms, even in the ...

An Estimated Structural Model of Entrepreneurial Behavior

By John Bailey Jones and Sangeeta Pratap

American Economic Review, September 2020

Using a rich panel of owner-operated New York dairy farms, we provide new evidence on entrepreneurial behavior. We formulate a dynamic model of farms facing uninsured risks and financial constraints. Farmers derive nonpecuniary benefits from operating the...

Policy Language and Information Effects in the Early Days of Federal Reserve Forward Guidance

By Kurt G. Lunsford

American Economic Review, September 2020

I show that the nature of the Federal Open Market Committee's (FOMC's) forward guidance language shapes the private sector's responses to monetary policy statements. From February 2000 to June 2003, the FOMC only gave forward guidance about economic outlo...

Perspectives from the President's Commission on Social Security Reform

By John F. Cogan and Olivia S. Mitchell

Journal of Economic Perspectives, Spring 2003

Recently we were asked to serve on the President's Commission to Strengthen Social Security (CSSS) along with 14 other members drawn equally from both major political parties. The Commission's charge was to provide recommendations to modernize the Social ...

Job Matching under Constraints

By Fuhito Kojima, Ning Sun, and Ning Neil Yu

American Economic Review, September 2020

Studying job matching in a Kelso-Crawford framework, we consider arbitrary constraints imposed on sets of doctors that a hospital can hire. We characterize all constraints that preserve the substitutes condition (for all revenue functions that satisfy the...

Ultimatum Bargaining with Rational Inattention

By Doron Ravid

American Economic Review, September 2020

A seller bargains with a rationally inattentive buyer (Sims 2003) over a good of random quality. After observing quality, the seller makes a take-it-or-leave-it offer. The buyer pays attention to the seller's product and offer at a cost proportional to ex...

Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects

By Clément de Chaisemartin and Xavier D'Haultfœuille

American Economic Review, September 2020

Linear regressions with period and group fixed effects are widely used to estimate treatment effects. We show that they estimate weighted sums of the average treatment effects (ATE) in each group and period, with weights that may be negative. Due to the n...

Front Matter

American Economic Review: Insights, September 2020

Bitcoin: An Axiomatic Approach and an Impossibility Theorem

By Jacob D. Leshno and Philipp Strack

American Economic Review: Insights, September 2020

Bitcoin's main innovation lies in allowing a decentralized system that relies on anonymous, profit-driven miners who can freely join the system. We formalize these properties in three axioms: anonymity of miners, no incentives for miners to consolidate, a...

The Long-Term Impacts of Grants on Poverty: Nine-Year Evidence from Uganda's Youth Opportunities Program

By Christopher Blattman, Nathan Fiala, and Sebastian Martinez

American Economic Review: Insights, September 2020

In 2008, Uganda gave 400 USD per person to thousands of young people to help them start skilled trades, work more, and raise incomes. Four years on, an experimental evaluation found grants raised work by 17 percent and earnings by 38 percent (Blattman, Fi...

Rage against the Machines: Labor-Saving Technology and Unrest in Industrializing England

By Bruno Caprettini and Hans-Joachim Voth

American Economic Review: Insights, September 2020

Can new technology cause social instability and unrest? We examine the famous "Captain Swing" riots in 1830s England. Newly collected data on threshing machine diffusion shows that labor-saving technology was associated with more riots. We instrument tech...

Revisiting the Global Decline of the (Non-housing) Labor Share

By Germán Gutiérrez and Sophie Piton

American Economic Review: Insights, September 2020

We show that cross-country comparisons of corporate labor shares are affected by differences in the delineation of corporate sectors. While the United States excludes all self-employed and most dwellings from the corporate sector, other countries include ...

Quality-Adjusted House Price Indexes

By Adam D. Nowak and Patrick S. Smith

American Economic Review: Insights, September 2020

The constant-quality assumption in repeat-sales house price indexes (HPIs) introduces a significant time-varying attribute bias. The direction, magnitude, and source of the bias varies throughout the market cycle and across metropolitan statistical areas ...

Foreign Competition and Domestic Innovation: Evidence from US Patents

By David Autor, David Dorn, Gordon H. Hanson, Gary Pisano, and Pian Shu

American Economic Review: Insights, September 2020

Manufacturing accounts for more than three-quarters of US corporate patents. The competitive shock to this sector emanating from China's economic ascent could in theory either augment or stifle US innovation. Using three decades of US patents matched to c...

Policy Watch: The Expanding Reach of the Individual Alternative Minimum Tax

By Leonard E. Burman, William G. Gale, and Jeffrey Rohaly

Journal of Economic Perspectives, Spring 2003

The individual alternative minimum tax (AMT) was designed in 1970 to apply reduce aggressive tax sheltering, but under current law will grow to cover tens of millions of households in the next decade. The growth occurs because the AMT is not indexed for i...