What Can We Learn from Sign-Restricted VARs?

By Christian K. Wolf

AEA Papers and Proceedings, May 2022

I use a simple business cycle model to illustrate the workings and limitations of sign restrictions in structural vector autoregressions. Three lessons emerge. First, such sign-based identification is vulnerable to "shock masquerading": linear combination...

Signing Out Confounding Shocks in Variance-Maximizing Identification Methods

By Neville Francis and Gene Kindberg-Hanlon

AEA Papers and Proceedings, May 2022

Recent papers have examined the dominant drivers of business cycles using variance-maximizing techniques for identification. However, identification is poor when shocks other than the target of interest play large roles in driving volatility at the target...

SVAR Identification from Higher Moments: Has the Simultaneous Causality Problem Been Solved?

By José Luis Montiel Olea, Mikkel Plagborg-Møller, and Eric Qian

AEA Papers and Proceedings, May 2022

Two recent strands of the structural vector autoregression literature use higher moments for identification, exploiting either non-Gaussianity or heteroskedasticity. These approaches achieve point identification without exclusion or sign restrictions. We ...

Do Bonuses Offset the Allocative Effects of Downward Rigid Base Wages?

By Anne Kathrin Funk and Daniel Kaufmann

AEA Papers and Proceedings, May 2022

We measure the labor market outcomes of employees with downward rigid base wages after an unexpected deflationary shock in Switzerland using a firm survey matched with Social Security register data. The employees that additionally receive downward flexibl...

Monetary Policy, Labor Market, and Sectoral Heterogeneity

By Aarti Singh, Jacek Suda, and Anastasia Zervou

AEA Papers and Proceedings, May 2022

We study the effects of monetary policy on the labor market across different sectors. We find that the employment response is stronger for firms in manufacturing and construction relative to firms in services. The result also holds within small and large ...

Persistent Monetary Policy in a Model with Labor Market Frictions

By Roman Goncharenko and Elizaveta Lukmanova

AEA Papers and Proceedings, May 2022

In a basic New Keynesian DSGE model with involuntary unemployment and inflation target shocks, we study the role of labor markets in the transmission of persistent monetary policy shocks that increase households' inflation expectations. The model predicts...

Enterprise Restructuring in Transition: A Quantitative Survey

By Simeon Djankov and Peter Murrell

Journal of Economic Literature, September 2002

We survey the empirical literature analyzing the process of enterprise restructuring in transition economies. The survey provides new insights into the relative effectiveness of different reform policies, and into how this effectiveness varies across regi...

Global Life Insurers during a Low Interest Rate Environment

By Ralph S. J. Koijen and Motohiro Yogo

AEA Papers and Proceedings, May 2022

Life insurers' business model has changed with the growth of insurance products with minimum return guarantees that are exposed to market and interest risks. The interest risk exposure of US and European insurers increased in the low-rate environments aft...

Shadow Bank Distress and Household Debt Relief: Evidence from the CARES Act

By Susan Cherry, Erica Jiang, Gregor Matvos, Tomasz Piskorski, and Amit Seru

AEA Papers and Proceedings, May 2022

Shadow banks service a substantial portion of household debt in the United States, including half of residential mortgages. They also funded and implemented a large portion of the CARES Act-driven debt relief. Despite uniform policy and similar borrowers,...

Weak Corporate Insolvency Rules: The Missing Driver of Zombie Lending

By Bo Becker and Victoria Ivashina

AEA Papers and Proceedings, May 2022

"Zombie lending"—lending to less-productive firms at subsidized rates—can help banks with misaligned incentives in the short run, but it prolongs economic downturns. We propose that inefficient resolution of insolvency is a significant contributor to ...

Undisclosed Debt Sustainability

By Laura Alfaro and Fabio Kanczuk

AEA Papers and Proceedings, May 2022

Over the past decade, non-Paris Club creditors, notably China, have become an important source of financing for low- and middle-income countries. In contrast with typical sovereign debt, these lending arrangements are not public, and other creditors have ...

Sovereign Debt Auctions in Turbulent Times

By Harold Cole, Daniel Neuhann, and Guillermo Ordoñez

AEA Papers and Proceedings, May 2022

We use a model of multiunit discriminatory auctions with asymmetrically informed risk-averse bidders to analyze Mexican sovereign bond auctions during periods of macroeconomic stress. We argue that the discriminatory protocol provides insurance benefits t...

Hidden Defaults

By Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch

AEA Papers and Proceedings, May 2022

China's lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China's loans, the associated defaults remain "hidden," as missed payments and restructuring details are not disclosed. We construct an...

Hidden Debt

By Bulent Guler, Yasin Kürşat Önder, and Temel Taskin

AEA Papers and Proceedings, May 2022

We study the role of transparency in debt and default dynamics in a quantitative sovereign default model augmented with asymmetric information. We assume that the sovereign debt portfolio is not transparent and part of the debt is not observable to lender...

Women's Employment and Empowerment: Descriptive Evidence

By Madeline McKelway

AEA Papers and Proceedings, May 2022

It is widely believed that female employment and empowerment are intimately related. This paper presents relationships between women's employment and various measures of their empowerment, using data from rural India. The measures capture several dimensio...

Empowering Women to Engage in Commercial Agriculture

By Kate Ambler, Kelly M. Jones, and Michael O'Sullivan

AEA Papers and Proceedings, May 2022

Despite women's large contributions to agricultural production in developing countries, they are often excluded from market-facing activities. There is little evidence on how to increase their participation in commercial agriculture. We designed a private...

Improving Willingness-to-Pay Elicitation by Including a Benchmark Good

By Rebecca Dizon-Ross and Seema Jayachandran

AEA Papers and Proceedings, May 2022

We propose and validate a simple way to augment the standard Becker-DeGroot-Marschak method that researchers use to elicit willingness to pay (WTP) for a good. The augmentation is to measure WTP for another good ("benchmark good"), one unrelated to both t...

Growth in Transition: What We Know, What We Don't, and What We Should

By Nauro F. Campos and Abrizio Coricelli

Journal of Economic Literature, September 2002

This essay surveys macroeconomic issues that marked the transition from planned to market economy in Central and Eastern European and former Soviet Union countries. We first establish stylized facts of the transition so far. We then critically survey the ...

Measuring Women's Empowerment in Collective Households

By Rossella Calvi, Jacob Penglase, and Denni Tommasi

AEA Papers and Proceedings, May 2022

Measuring women's empowerment within families is challenging. Social scientists often rely on close-ended survey questions on women's participation in household decisions, domestic abuse, and autonomy to measure women's power and agency. Recent advances i...

Gender Disparities in Career Advancement across the Transition to Parenthood: Evidence from the Marine Corps

By Olivia J. Healy and Jennifer A. Heissel

AEA Papers and Proceedings, May 2022

We isolate the effect of childbirth on mothers' and fathers' job-relevant physical performance using data from the US Marines. We estimate event study models around the first birth. We assign "placebo births" to non-parents using LASSO-selected predictors...