Intergenerational Spillovers in Disability Insurance

By Gordon B. Dahl and Anne C. Gielen

American Economic Journal: Applied Economics, April 2021

Using a 1993 Dutch policy reform and a regression discontinuity design, we find children of parents whose disability insurance (DI) eligibility was reduced are 11 percent less likely to participate in DI themselves, do not alter their use of other governm...

Disability and Distress: The Effect of Disability Programs on Financial Outcomes

By Manasi Deshpande, Tal Gross, and Yalun Su

American Economic Journal: Applied Economics, April 2021

What is the relationship between disability programs and financial distress? We provide the first evidence on this relationship using several markers of financial distress: bankruptcy, foreclosure, eviction, and home sale. Rates of these adverse financial...

The Power of Social Pensions: Evidence from China's New Rural Pension Scheme

By Wei Huang and Chuanchuan Zhang

American Economic Journal: Applied Economics, April 2021

This paper utilizes the county-by-county rollout of China's New Rural Pension Scheme (NRPS) and finds that, among age-eligible people, the pension scheme leads to higher household income and food expenditure, less farmwork, better health, and lower mortal...

Subsidies and the African Green Revolution: Direct Effects and Social Network Spillovers of Randomized Input Subsidies in Mozambique

By Michael Carter, Rachid Laajaj, and Dean Yang

American Economic Journal: Applied Economics, April 2021

The Green Revolution, which bolstered agricultural yields and economic well-being in Asia and Latin America beginning in the 1960s, largely bypassed sub-Saharan Africa. We study the first randomized controlled trial of a government-implemented input subsi...

The Power of Example: Corruption Spurs Corruption

By Nicolás Ajzenman

American Economic Journal: Applied Economics, April 2021

Does political corruption erode civic values and foster dishonest behavior? I test this hypothesis in the context of Mexico by combining data on local government corruption and cheating on school tests. I find that, following revelations of corruption by ...

Physician Practice Organization and Negotiated Prices: Evidence from State Law Changes

By Naomi Hausman and Kurt Lavetti

American Economic Journal: Applied Economics, April 2021

We study the relationship between physician organizational structures and prices negotiated with private insurers. Using variation caused by state-level judicial law changes, we show that a 10 percent increase in the enforceability of noncompete agreement...

Growing Markets through Business Training for Female Entrepreneurs: A Market-Level Randomized Experiment in Kenya

By David McKenzie and Susana Puerto

American Economic Journal: Applied Economics, April 2021

A common concern with efforts to directly help some small businesses to grow is that their growth comes at the expense of their unassisted competitors. We test this possibility using a two-stage randomized experiment in Kenya that randomizes business trai...

Front Matter

American Economic Journal: Macroeconomics, April 2021

Prediction Markets

[Symposium: Event Markets]

By Justin Wolfers and Eric Zitzewitz

Journal of Economic Perspectives, Spring 2004

We analyze the extent to which simple markets can be used to aggregate disperse information into efficient forecasts of uncertain future events. Drawing together data from a range of prediction contexts, we show that market-generated forecasts are typical...

Transmission of Monetary Policy with Heterogeneity in Household Portfolios

By Ralph Luetticke

American Economic Journal: Macroeconomics, April 2021

This paper assesses the importance of heterogeneity in household portfolios for the transmission of monetary policy in a New Keynesian business cycle model with uninsurable income risk and assets with different liquidity. In this environment, monetary tra...

Sovereign Debt Restructurings

By Maximiliano Dvorkin, Juan M. Sánchez, Horacio Sapriza, and Emircan Yurdagul

American Economic Journal: Macroeconomics, April 2021

Sovereign debt crises involve debt restructurings characterized by a mix of face value haircuts and maturity extensions. The prevalence of maturity extensions has been hard to reconcile with economic theory. We develop a model of endogenous debt restructu...

The Trade-Comovement Puzzle

By Lukasz A. Drozd, Sergey Kolbin, and Jaromir B. Nosal

American Economic Journal: Macroeconomics, April 2021

Standard international transmission mechanism of productivity shocks predicts a weak endogenous linkage between trade and business cycle synchronization: a problem known as the trade-comovement puzzle. We provide the foundational analysis of the puzzle, p...

Monetary Policy and Bubbles in a New Keynesian Model with Overlapping Generations

By Jordi Galí

American Economic Journal: Macroeconomics, April 2021

I analyze an extension of the New Keynesian model that features overlapping generations of finitely lived agents and (stochastic) transitions to inactivity. In contrast with the standard model, the proposed framework allows for the existence of rational e...

Risk, the College Premium, and Aggregate Human Capital Investment

By Kartik Athreya and Janice Eberly

American Economic Journal: Macroeconomics, April 2021

Despite increases in the college earnings premium to persistently high levels, investment in college education remains low. We can understand this apparent puzzle by considering the risk of attending college and, in particular, the possibility of failing ...

Oil, Equities, and the Zero Lower Bound

By Deepa D. Datta, Benjamin K. Johannsen, Hannah Kwon, and Robert J. Vigfusson

American Economic Journal: Macroeconomics, April 2021

From late 2008 to 2014, oil and equity returns were more positively correlated than in other periods. In addition, we show that both oil and equity returns became more responsive to macroeconomic news. We provide empirical evidence that these changes resu...

How Do Mortgage Refinances Affect Debt, Default, and Spending? Evidence from HARP

By Joshua Abel and Andreas Fuster

American Economic Journal: Macroeconomics, April 2021

We use quasi-random access to the Home Affordable Refinance Program (HARP) to identify the causal effect of refinancing into a lower-rate mortgage on borrower balance sheet outcomes. Refinancing substantially reduces borrower default rates on mortgages an...

Monetary Policy and Inequality under Labor Market Frictions and Capital-Skill Complementarity

By Juan J. Dolado, Gergő Motyovszki, and Evi Pappa

American Economic Journal: Macroeconomics, April 2021

We provide a new channel through which monetary policy has distributional consequences at business cycle frequencies. We show that an unexpected monetary easing increases labor income inequality between high-skilled and less-skilled workers. To rationaliz...

The Choice Channel of Financial Innovation

By Felipe S. Iachan, Plamen T. Nenov, and Alp Simsek

American Economic Journal: Macroeconomics, April 2021

Financial innovation in recent decades has expanded portfolio choice. We investigate how greater choice affects investors' savings and asset returns. We establish a choice channel by which greater portfolio choice increases investors' savings—by enablin...

Interest Rate Liberalization and Capital Misallocations

By Zheng Liu, Pengfei Wang, and Zhiwei Xu

American Economic Journal: Macroeconomics, April 2021

We study the consequences of interest rate liberalization in a two-sector general equilibrium model of China. The model captures a key feature of China's distorted financial system: state-owned enterprises (SOEs) have greater incentive to expand productio...

Historical Presidential Betting Markets

[Symposium: Event Markets]

By Paul W. Rhode and Koleman S. Strumpf

Journal of Economic Perspectives, Spring 2004

This paper analyzes the large and often well-organized markets for betting on U.S. presidential elections that operated between 1868 and 1940. Four main points are addressed. First, we show that the market did a remarkable job forecasting elections in an ...