SVAR (Mis)identification and the Real Effects of Monetary Policy Shocks

By Christian K. Wolf

American Economic Journal: Macroeconomics, October 2020

I argue that the seemingly disparate findings of the recent empirical literature on monetary policy transmission are all consistent with the same standard macro models. Weak sign restrictions, which suggest that contractionary monetary policy, if anything...

Bubbly Recessions

By Siddhartha Biswas, Andrew Hanson, and Toan Phan

American Economic Journal: Macroeconomics, October 2020

We develop a tractable bubbles model with financial friction and downward wage rigidity. Competitive speculation in risky bubbles can result in excessive investment booms that precede inefficient busts, where post- bubble aggregate economic activities col...

Shining a Light on Purchasing Power Parities

By Maxim Pinkovskiy and Xavier Sala-i-Martin

American Economic Journal: Macroeconomics, October 2020

We use satellite-recorded nighttime lights as an independent benchmark of economic activity in order to generate three findings in the study of PPP-adjusted estimates of GDP. First, PPP-adjusted estimates better describe poor economies than do market exch...

Can Foreign Aid Buy Growth?

[Symposium: Global Poverty Reduction]

By William Easterly

Journal of Economic Perspectives, Summer 2003

The widely publicized finding that "aid promotes growth in a good policy environment" is not robust to the inclusion of new data or alternative definitions of "aid," "policy" or "growth." The idea that "aid buys growth" is on shaky ground theoretically an...

The Rise of Services and Balanced Growth in Theory and Data

By Miguel León-Ledesma and Alessio Moro

American Economic Journal: Macroeconomics, October 2020

We investigate the effect of structural transformation on the process of economic growth. Using a two-sector growth model we show that, in addition to Baumol's cost disease, structural transformation from goods to services generates other predictions that...

The Migration Accelerator: Labor Mobility, Housing, and Demand

By Greg Howard

American Economic Journal: Macroeconomics, October 2020

What is the role of migration in regional evolutions? I document that within-US migration causes a reduction in the unemployment rate of the receiving city over several years. To establish this causal effect, I construct an instrument using out-migration ...

Quantitative Easing, Collateral Constraints, and Financial Spillovers

By John Geanakoplos and Haobin Wang

American Economic Journal: Macroeconomics, October 2020

The steady application of quantitative easing (QE) has been followed by big and nonmonotonic effects on international asset prices and capital flows. We rationalize these observations in a model in which a central bank buys domestic assets that serve as t...

Fighting Crises with Secrecy

By Gary Gorton and Guillermo Ordoñez

American Economic Journal: Macroeconomics, October 2020

How does central bank lending during a crisis restore confidence? Emergency lending facilities that are opaque (in that names of borrowers are kept secret) raise the perceived average quality of bank assets in the economy, creating an information external...

Beyond Competitive Devaluations: The Monetary Dimensions of Comparative Advantage

By Paul R. Bergin and Giancarlo Corsetti

American Economic Journal: Macroeconomics, October 2020

Motivated by the long-standing debate on competitive devaluation, we propose a new perspective on how monetary and exchange rate policies can contribute to a country's international competitiveness. We refocus the analysis on the implications of monetary ...

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...

Executive Compensation as an Agency Problem

[Symposium: Stock Options]

By Lucian Arye Bebchuk and Jesse M. Fried

Journal of Economic Perspectives, Summer 2003

Executive compensation has long attracted a great deal of attention from financial economists. Indeed, the increase in academic papers on the subject of CEO compensation during the 1990s seems to have outpaced even the remarkable increase in CEO pay itsel...

Front Matter

American Economic Journal: Microeconomics, November 2020

Demand Volatility, Adjustment Costs, and Productivity: An Examination of Capacity Utilization in Hotels and Airlines

By R. Andrew Butters

American Economic Journal: Microeconomics, November 2020

Measures of productivity reveal large differences across producers even within narrowly defined industries. Traditional measures of productivity, however, will associate differences in demand volatility to differences in productivity when adjusting factor...

Why Have Americans Become More Obese?

By David M. Cutler, Edward L. Glaeser, and Jesse M. Shapiro

Journal of Economic Perspectives, Summer 2003

Americans have become considerably more obese over the past 25 years. This increase is primarily the result of consuming more calories. The increase in food consumption is itself the result of technological innovations which made it possible for food to b...

Optimal Collateralized Contracts

By Dan Cao and Roger Lagunoff

American Economic Journal: Microeconomics, November 2020

We examine the role of collateral in a dynamic model of optimal credit contracts in which a borrower values both housing and nonhousing consumption. The borrower's private information about his income is the only friction. An optimal contract is collatera...

Information Transmission under the Shadow of the Future: An Experiment

By Alistair J. Wilson and Emanuel Vespa

American Economic Journal: Microeconomics, November 2020

We experimentally examine how information transmission functions in an ongoing relationship. Where the one-shot cheap-talk literature documents substantial overcommunication and preferences for honesty, the outcomes in our repeated setting are more consis...

The Importance of Commitment Power in Games with Imperfect Evidence

By Francisco Silva

American Economic Journal: Microeconomics, November 2020

The literature initiated by Green and Laffont (1986) studies principal-agent models with hard evidence. Evidence is modeled by assuming that the message set of the agent is type dependent. In this setup, Glazer and Rubinstein (2004, 2006) and Sher (2011) ...

Testable Implications of Models of Intertemporal Choice: Exponential Discounting and Its Generalizations

By Federico Echenique, Taisuke Imai, and Kota Saito

American Economic Journal: Microeconomics, November 2020

We present revealed-preference characterizations of the most common models of intertemporal choice: the model of exponentially discounted concave utility, and some of its generalizations. Our characterizations take consumption data as primitives, and prov...

Hybrid All-Pay and Winner-Pay Contests

By Johan N. M. Lagerlöf

American Economic Journal: Microeconomics, November 2020

In many contests in economic and political life, both all-pay and winner-pay expenditures matter for winning. This paper studies such hybrid contests under symmetry and asymmetry. The symmetric model assumes very little structure but yields a simple close...

Informational Cycles in Search Markets

By Eeva Mauring

American Economic Journal: Microeconomics, November 2020

I show that market participants' equilibrium beliefs can create fluctuations in the volume of trading, even in a stationary environment. I study a sequential search model where buyers face an unknown distribution of offers. Each buyer learns about the dis...