Information Validates the Prior: A Theorem on Bayesian Updating and Applications

By Navin Kartik, Frances Xu Lee, and Wing Suen

American Economic Review: Insights, June 2021

We develop a result on expected posteriors for Bayesians with heterogenous priors, dubbed information validates the prior (IVP). Under familiar ordering requirements, Anne expects a (Blackwell) more informative experiment to bring Bob's posterior mean clo...

Does Biology Drive Child Penalties? Evidence from Biological and Adoptive Families

By Henrik Kleven, Camille Landais, and Jakob Egholt Søgaard

American Economic Review: Insights, June 2021

This paper investigates whether the impact of children on the labor market outcomes of women relative to men—child penalties—can be explained by the biological links between mother and child. We estimate child penalties in biological and adoptive fami...

Leaning against the Wind and Crisis Risk

By Moritz Schularick, Lucas ter Steege, and Felix Ward

American Economic Review: Insights, June 2021

Can central banks defuse rising stability risks in financial booms by leaning against the wind with higher interest rates? This paper studies the state-dependent effects of monetary policy on financial crisis risk. Based on the near-universe of advanced e...

Endogenous Education and Long-Run Factor Shares

By Gene M. Grossman, Elhanan Helpman, Ezra Oberfield, and Thomas Sampson

American Economic Review: Insights, June 2021

We study the determinants of factor shares in a neoclassical environment with capital-skill complementarity and endogenous education. In this environment estimates of the elasticity of substitution between capital and labor that fail to account for human ...

Persistent Political Engagement: Social Interactions and the Dynamics of Protest Movements

By Leonardo Bursztyn, Davide Cantoni, David Y. Yang, Noam Yuchtman, and Y. Jane Zhang

American Economic Review: Insights, June 2021

We study the causes of sustained participation in political movements. To identify the persistent effect of protest participation, we randomly indirectly incentivize Hong Kong university students into participation in an antiauthoritarian protest. To iden...

The Purchasing Power Parity Debate

By Alan M. Taylor and Mark P. Taylor

Journal of Economic Perspectives, Fall 2004

Originally propounded by the sixteenth-century scholars of the University of Salamanca, the concept of purchasing power parity (PPP) was revived in the interwar period in the context of the debate concerning the appropriate level at which to reestablish i...

Antitrust Policies and Profitability in Nontradable Sectors

By Timothy Besley, Nicola Fontana, and Nicola Limodio

American Economic Review: Insights, June 2021

Firms in tradable sectors are more likely to be subject to external competition to limit market power, while nontradable firms are more dependent on domestic policies and institutions. This paper combines an antitrust index available for multiple countrie...

Front Matter

Journal of Economic Literature, June 2021

Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects

By Alberto Abadie

Journal of Economic Literature, June 2021

Probably because of their interpretability and transparent nature, synthetic controls have become widely applied in empirical research in economics and the social sciences. This article aims to provide practical guidance to researchers employing synthetic...

Foreign Influence and Domestic Policy

By Toke S. Aidt, Facundo Albornoz, and Esther Hauk

Journal of Economic Literature, June 2021

In an interconnected world, economic and political interests inevitably reach beyond national borders. Since policy choices generate external economic and political costs, foreign state and non-state actors have an interest in influencing policy actions i...

Global Public Goods: A Survey

By Wolfgang Buchholz and Todd Sandler

Journal of Economic Literature, June 2021

This survey investigates the increasing importance of global public goods (GPGs) in today's interdependent world, driven by ever-growing, cross-border externalities and public good spillovers. Novel technologies, enhanced globalization, and population i...

On the (Ir)Relevance of Distribution and Labor Supply Distortion to Government Policy

By Louis Kaplow

Journal of Economic Perspectives, Fall 2004

Should the assessment of government policies, such as the provision of public goods and the control of externalities, deviate from first-best principles to account for distributive effects and the distortionary cost of labor income taxation? For example, ...

What Limits College Success? A Review and Further Analysis of Holzer and Baum's Making College Work

By Philip Oreopoulos

Journal of Economic Literature, June 2021

Harry J. Holzer and Sandy Baum's recent book, Making College Work: Pathways to Success for Disadvantaged Students, provides an excellent up-to-date review of higher education. My review first summarizes its key themes: (i) who gains from college ...

A Review of Thomas Sowell's Discrimination and Disparities

By Jennifer L. Doleac

Journal of Economic Literature, June 2021

In Discrimination and Disparities, Thomas Sowell describes how economists think about the causes of disparities in socioeconomic outcomes. He cautions against government intervention to reduce disparities, noting that such interventions often hav...

On the Finding of an Equilibrium: Düppe–Weintraub and the Problem of Scientific Credit

By M. Ali Khan

Journal of Economic Literature, June 2021

In this review article, I read a book that revolves around two papers published in 1954, one by Lionel McKenzie, and the other by Kenneth Arrow and Gérard Debreu—Till Düppe and E. Roy Weintraub's Finding Equilibrium: Arrow, Debreu, McKenzie and...

Counterfactuals, Empires, and Institutions: Reflections on Walter Scheidel's Escape from Rome

By Mark Koyama

Journal of Economic Literature, June 2021

This essay reviews Escape from Rome: The Failure of Empire and the Road to Prosperity by Walter Scheidel. It examines the argument that Europe's persistent fragmentation following the collapse of the Roman Empire is responsible for the origins of...

Book Reviews

Journal of Economic Literature, June 2021

Annotated Listing of New Books

Journal of Economic Literature, June 2021

JEL Classification System

Journal of Economic Literature, June 2021

Urban Sprawl

By Thomas J. Nechyba and Randall P. Walsh

Journal of Economic Perspectives, Fall 2004

We begin with an overview of the causes and consequences of urban sprawl in the twentieth century, focusing in particular on lower transportation costs and self-sorting of the population. By sprawl, we will mean the tendency toward lower city densities as...