The Redistributional Impact of Nonlinear Electricity Pricing

By Severin Borenstein

American Economic Journal: Economic Policy, August 2012

Electricity regulators often mandate increasing-block pricing (IBP)—i.e., marginal price increases with the customer's average daily usage—to protect low-income households from rising costs. IBP has no cost basis, raising a classic conflict be...

Political Regimes and Economic Growth

[Symposium: Democracy and Development]

By Adam Przeworski and Fernando Limongi

Journal of Economic Perspectives, Summer 1993

Does democracy in the political realm foster or hinder economic growth? Our discussion of this question begins with a review of arguments in favor of, and against, democracy. Then we summarize statistical studies in which political regime is included amon...

Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform

By Eric V. Edmonds, Nina Pavcnik, and Petia Topalova

American Economic Journal: Applied Economics, October 2010

Does trade policy influence schooling and child labor in low-income countries? We examine this question in the context of India's 1991 tariff reforms. While schooling increased and child labor declined in rural India in the 1990s, these trends are attenua...

Consumption Responses to In-Kind Transfers: Evidence from the Introduction of the Food Stamp Program

By Hilary W. Hoynes and Diane Whitmore Schanzenbach

American Economic Journal: Applied Economics, October 2009

Economists have strong theoretical predictions about how in-kind transfers, such as providing vouchers for food, impact consumption. Despite the prominence of the theory, there is little empirical work on responses to in-kind transfers, and most existi...

Tranching, CDS, and Asset Prices: How Financial Innovation Can Cause Bubbles and Crashes

By Ana Fostel and John Geanakoplos

American Economic Journal: Macroeconomics, January 2012

We show how the timing of financial innovation might have contributed to the mortgage bubble and then to the crash of 2007-2009. We show why tranching and leverage first raised asset prices and why CDS lowered them afterward. This may seem puzzling, since...

From Divergence to Convergence: Reevaluating the History behind China's Economic Boom

By Loren Brandt, Debin Ma, and Thomas G. Rawski

Journal of Economic Literature, March 2014

China's long-term economic dynamics pose a formidable challenge to economic historians. The Qing Empire (1644-1911), the world's largest national economy before 1800, experienced a tripling of population during the seventeenth and eighteenth centuries wit...

The Optimal Conduct of Monetary Policy with Interest on Reserves

By Anil K. Kashyap and Jeremy C. Stein

American Economic Journal: Macroeconomics, January 2012

In a world with interest on reserves, the central bank has two distinct tools that it can use to raise the short-term policy rate: it can either increase the interest it pays on reserve balances, or it can reduce the quantity of reserves in the system. We...

Central Bank Communication and Expectations Stabilization

By Stefano Eusepi and Bruce Preston

American Economic Journal: Macroeconomics, July 2010

The value of communication is analyzed in a model in which agents' expectations need not be consistent with central bank policy. Without communication, the Taylor principle is not sufficient for macroeconomic stability: divergent learning dynamics are pos...

Iodine Deficiency and Schooling Attainment in Tanzania

By Erica Field, Omar Robles, and Maximo Torero

American Economic Journal: Applied Economics, October 2009

Cognitive damage from iodine deficiency disorders (IDD) has important implications for economic growth through its effect on human capital. To gauge the magnitude of this influence, we evaluate the impact on schooling of reductions in IDD from intensiv...

Teacher Testing, Teacher Education, and Teacher Characteristics

By Joshua D. Angrist and Jonathan Guryan

American Economic Review, May 2004

Housing Bubbles

By Óscar Arce and David López-Salido

American Economic Journal: Macroeconomics, January 2011

We use the notion of a housing bubble as an equilibrium in which some investors hold houses for resale purposes only and not with the expectation of receiving a dividend, either in the form of rent or utility. We show that an economy with looser collatera...

Housing Wealth and Consumption: Evidence from Geographically-Linked Microdata

By Aditya Aladangady

American Economic Review, November 2017

Rising home values also raise the cost of living, offsetting their impact on consumption. However, additional home equity collateral can loosen borrowing constraints, increasing spending for households that value their current endowment of housing highl...

Regression Discontinuity Designs in Economics

By David S. Lee and Thomas Lemieux

Journal of Economic Literature, June 2010

This paper provides an introduction and "user guide" to Regression Discontinuity (RD) designs for empirical researchers. It presents the basic theory behind the research design, details when RD is likely to be valid or invalid given economic incentives, ...

Who Pays for Obesity?

By Jay Bhattacharya and Neeraj Sood

Journal of Economic Perspectives, Winter 2011

Adult obesity is a growing problem. From 1962 to 2006, obesity prevalence nearly tripled to 35.1 percent of adults. The rising prevalence of obesity is not limited to a particular socioeconomic group and is not unique to the United States. Should this wid...

The Economics of Convention

By H. Peyton Young

Journal of Economic Perspectives, Spring 1996

The purpose of conventions is to coordinate people's expectations in economic and social interactions that have multiple equilibria. Conventions often emerge endogenously from the accumulation of many precedents, a process that can be modeled as a stochas...

E-Books: A Tale of Digital Disruption

By Richard J. Gilbert

Journal of Economic Perspectives, Summer 2015

E-book sales surged after Amazon introduced the Kindle e-reader at the end of 2007 and accounted for about one quarter of all trade book sales by the end of 2013. Amazon's aggressive (low) pricing of e-books led to allegations that e-books were bankrupt...

Retrospectives: Hume on Money, Commerce, and the Science of Economics

By Margaret Schabas and Carl Wennerlind

Journal of Economic Perspectives, Summer 2011

David Hume (1711-1776) is arguably the most esteemed philosopher to have written in the English language. During his lifetime, however, Hume was as well if not better known for his contributions to political economy, particularly for the essays published ...

The FOMC versus the Staff: Where Can Monetary Policymakers Add Value?

By Christina D. Romer and David H. Romer

American Economic Review, May 2008

Generalized Social Marginal Welfare Weights for Optimal Tax Theory

By Emmanuel Saez and Stefanie Stantcheva

American Economic Review, January 2016

This paper proposes to evaluate tax reforms by aggregating money metric losses and gains of different individuals using "generalized social marginal welfare weights." Optimum tax formulas take the same form as standard welfarist tax formulas by simply sub...

The Power of Forward Guidance Revisited

By Alisdair McKay, Emi Nakamura, and Jón Steinsson

American Economic Review, October 2016

In recent years, central banks have increasingly turned to forward guidance as a central tool of monetary policy. Standard monetary models imply that far future forward guidance has huge effects on current outcomes, and these effects grow with the horizon...