Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others

By Lars E.O. Svensson

Journal of Economic Perspectives, Fall 2003

Existing proposals to escape from a liquidity trap and deflation, including my "Foolproof Way," are discussed in the light of the optimal way to escape. The optimal way involves three elements: (1) an explicit central-bank commitment to a higher future pr...

Front Matter

American Economic Review, January 2021

Going Negative at the Zero Lower Bound: The Effects of Negative Nominal Interest Rates

By Mauricio Ulate

American Economic Review, January 2021

After the Great Recession several central banks started setting negative nominal interest rates in an expansionary attempt, but the effectiveness of this measure remains unclear. Negative rates can stimulate the economy by lowering the rates that commerci...

Mobilizing the Masses for Genocide

By Thorsten Rogall

American Economic Review, January 2021

Do political elites use armed groups to foster civilian participation in genocidal violence? Are armed groups employed strategically? How do they mobilize civilians? I investigate these questions using data from the Rwandan Genocide. To establish causalit...

Equilibrium Technology Diffusion, Trade, and Growth

By Jesse Perla, Christopher Tonetti, and Michael E. Waugh

American Economic Review, January 2021

We study how opening to trade affects economic growth in a model where heterogeneous firms can adopt new technologies already in use by other firms in their home country. We characterize the growth rate using a summary statistic of the profit distribution...

The Distributional Consequences of Public School Choice

By Christopher Avery and Parag A. Pathak

American Economic Review, January 2021

School choice systems aspire to delink residential location and school assignments by allowing children to apply to schools outside of their neighborhood. However, choice programs also affect incentives to live in certain neighborhoods, and this feedback ...

Politically Feasible Reforms of Nonlinear Tax Systems

By Felix J. Bierbrauer, Pierre C. Boyer, and Andreas Peichl

American Economic Review, January 2021

We study reforms of nonlinear income tax systems from a political economy perspective. We present a median voter theorem for monotonic tax reforms, reforms so that the change in the tax burden is a monotonic function of income. We also provide an empirica...

Asymmetric Consumption Smoothing

By Brian Baugh, Itzhak Ben-David, Hoonsuk Park, and Jonathan A. Parker

American Economic Review, January 2021

Analyzing account-level data from an account aggregator, we find that households increase consumption when they receive expected tax refunds, as if they face liquidity constraints. However, these same households smooth consumption when making payments in ...

The Demographic Transition: Three Centuries of Fundamental Change

By Ronald Lee

Journal of Economic Perspectives, Fall 2003

The global demographic transition began around 1800 in Europe with declining mortality followed by declining fertility, trends which spread around the world and continue in this century. At the aggregate level, population size greatly increased, growth ac...

Lack of Selection and Limits to Delegation: Firm Dynamics in Developing Countries

By Ufuk Akcigit, Harun Alp, and Michael Peters

American Economic Review, January 2021

Delegating managerial tasks is essential for firm growth. Most firms in developing countries, however, do not hire outside managers but instead rely on family members. In this paper, we ask if this lack of managerial delegation can explain why firms in po...

Using Models to Persuade

By Joshua Schwartzstein and Adi Sunderam

American Economic Review, January 2021

We present a framework where "model persuaders" influence receivers' beliefs by proposing models that organize past data to make predictions. Receivers are assumed to find models more compelling when they better explain the data, fixing receivers' prior b...

Job Seekers' Perceptions and Employment Prospects: Heterogeneity, Duration Dependence, and Bias

By Andreas I. Mueller, Johannes Spinnewijn, and Giorgio Topa

American Economic Review, January 2021

This paper uses job seekers' elicited beliefs about job finding to disentangle the sources of the decline in job-finding rates by duration of unemployment. We document that beliefs have strong predictive power for job finding, but are not revised downward...

Lumpy Investment, Business Cycles, and Stimulus Policy

By Thomas Winberry

American Economic Review, January 2021

I study the aggregate implications of micro-level lumpy investment in a model consistent with the empirical dynamics of the real interest rate. The elasticity of aggregate investment with respect to shocks is procyclical because more firms are likely to m...

Front Matter

American Economic Journal: Applied Economics, January 2021

Going Beneath the Surface: Petroleum Pollution, Regulation, and Health

By Michelle Marcus

American Economic Journal: Applied Economics, January 2021

This paper quantifies the health impacts of petroleum leaks from underground storage tanks, the effectiveness of tank regulation, and the role of information as a policy tool in the same setting. Exposure to a leaking underground storage tank during gesta...

Poverty and Migration in the Digital Age: Experimental Evidence on Mobile Banking in Bangladesh

By Jean N. Lee, Jonathan Morduch, Saravana Ravindran, Abu Shonchoy, and Hassan Zaman

American Economic Journal: Applied Economics, January 2021

Rapid urbanization is reshaping economies and intensifying spatial inequalities. In Bangladesh, we experimentally introduced mobile banking to very poor rural households and family members who had migrated to the city, testing whether mobile technology ca...

Gambling, Saving, and Lumpy Liquidity Needs

By Sylvan Herskowitz

American Economic Journal: Applied Economics, January 2021

I present evidence that unmet liquidity needs for indivisible, "lumpy," expenditures increase demand for betting as a second-best method of liquidity generation in the presence of financial constraints. With a sample of 1,708 sports bettors in Kampala, Ug...

The Black-White Gap in Noncognitive Skills among Elementary School Children

By Todd Elder and Yuqing Zhou

American Economic Journal: Applied Economics, January 2021

Using two nationally representative datasets, we find large differences between Black and White children in teacher-reported measures of noncognitive skills. We show that teacher reports understate true Black-White skill gaps because of reference bias: te...

Turbulence, Firm Decentralization, and Growth in Bad Times

By Philippe Aghion, Nicholas Bloom, Brian Lucking, Raffaella Sadun, and John Van Reenen

American Economic Journal: Applied Economics, January 2021

What is the optimal form of firm organization during "bad times"? The greater turbulence following macro shocks may benefit decentralized firms because the value of local information increases (the "localist" view). On the other hand, the need to make t...

Anomalies: The Law of One Price in Financial Markets

By Owen A. Lamont and Richard H. Thaler

Journal of Economic Perspectives, Fall 2003

The Law of One price states that identical goods (or securities) should sell for identical prices. In financial markets the law of one price is thought to hold almost exactly, and is the basis for much of financial economic theory. We present evidence on ...