Monetary Policy with Opinionated Markets

By Ricardo J. Caballero and Alp Simsek

American Economic Review, July 2022

We build a model in which the Fed and the market disagree about future aggregate demand. The market anticipates monetary policy "mistakes," which affect current demand and induce the Fed to partially accommodate the market's view. The Fed expects to imple...

Estimating Spillovers from Publicly Funded R&D: Evidence from the US Department of Energy

By Kyle R. Myers and Lauren Lanahan

American Economic Review, July 2022

We quantify the magnitude of R&D spillovers created by grants to small firms from the US Department of Energy. Our empirical strategy leverages variation due to state-specific matching policies, and we develop a new approach to measuring both geographic a...

Digital Addiction

By Hunt Allcott, Matthew Gentzkow, and Lena Song

American Economic Review, July 2022

Many have argued that digital technologies such as smartphones and social media are addictive. We develop an economic model of digital addiction and estimate it using a randomized experiment. Temporary incentives to reduce social media use have persistent...

Health, Inequality, and Economic Development

By Angus Deaton

Journal of Economic Literature, March 2003

I discuss mechanisms linking health and inequality and review evidence for effects of income inequality on aggregate and individual mortality, over time and over space. I conclude that there is no direct link. Correlations come from factors other than inc...

Front Matter

American Economic Journal: Macroeconomics, July 2022

Optimal Taxation with Endogenous Default under Incomplete Markets

By Demian Pouzo and Ignacio Presno

American Economic Journal: Macroeconomics, July 2022

How are the optimal tax and debt policies affected if the government can default on its debt? We address this question from a normative perspective in an economy with noncontingent government debt, domestic default, and labor taxes. On one hand, default p...

Dynamics of Markups, Concentration, and Product Span

By Elhanan Helpman and Benjamin Niswonger

American Economic Journal: Macroeconomics, July 2022

We develop a model with a finite number of multiproduct firms together with a continuum of single-product firms and study the dynamics that arise from product innovation. Consistent with the available evidence, the model predicts rising markups and concen...

Occupational Matching and Cities

By Theodore Papageorgiou

American Economic Journal: Macroeconomics, July 2022

In this paper, I document that workers in larger cities have significantly more occupational options than workers in smaller ones. They are able to form better occupational matches and earn higher wages. I also note differences in occupation reallocation ...

The Neo-Fisher Effect: Econometric Evidence from Empirical and Optimizing Models

By Martín Uribe

American Economic Journal: Macroeconomics, July 2022

This paper assesses the presence and importance of the neo-Fisher effect in postwar data. It formulates and estimates an empirical and a New Keynesian model driven by stationary and nonstationary monetary and real shocks. In accordance with conventional w...

The Decline of the Labor Share: New Empirical Evidence

By Drago Bergholt, Francesco Furlanetto, and Nicolò Maffei-Faccioli

American Economic Journal: Macroeconomics, July 2022

We use time series techniques to estimate the importance of four main explanations for the decline of the US labor income share: rising firm markups, falling bargaining power of workers, higher investment-specific technology growth, and more automated pro...

Radical and Incremental Innovation: The Roles of Firms, Managers, and Innovators

By Daron Acemoglu, Ufuk Akcigit, and Murat Alp Celik

American Economic Journal: Macroeconomics, July 2022

We investigate the determinants of radical ("creative") innovations that break new ground in knowledge creation. We develop a model focusing on the choice between incremental and radical innovation and on how managers of different ages and human capital a...

Public Education Inequality and Intergenerational Mobility

By Angela Zheng and James Graham

American Economic Journal: Macroeconomics, July 2022

Public school funding depends heavily on local property tax revenue. Consequently, low-income households have limited access to quality education in neighborhoods with high house prices. In a dynamic life-cycle model with neighborhood choice and endogenou...

The Term Structure of Growth-at-Risk

By Tobias Adrian, Federico Grinberg, Nellie Liang, Sheheryar Malik, and Jie Yu

American Economic Journal: Macroeconomics, July 2022

We show that the conditional distribution of forecasted GDP growth depends on financial conditions in a panel of 11 advanced economies. Financial conditions have a larger effect on the lower fifth percentile of conditional growth—which we call growth-at...

Learning by Sharing: Monetary Policy and Common Knowledge

By Alexandre N. Kohlhas

American Economic Journal: Macroeconomics, July 2022

A common view states that central bank releases decrease central banks' own information about the economy and are harmful if about inefficient disturbances, such as cost-push shocks. This paper shows how neither is true in a microfounded macroeconomic mod...

Measurement Error in the Consumer Price Index: Where Do We Stand?

By David E. Lebow and Jeremy B. Rudd

Journal of Economic Literature, March 2003

We survey the evidence on CPI bias and provide our best estimate of its magnitude. We also identify a "weighting" bias that has not been quantified previously. We estimate that the CPI currently overstates the rate of change in the cost of living by about...

Dynamic Capital Tax Competition under the Source Principle

By Till Gross, Paul Klein, and Miltiadis Makris

American Economic Journal: Macroeconomics, July 2022

We explore the short- and long-run implications of tax competition between jurisdictions, where governments can only tax capital at source. We do this in the context of a neoclassical growth model under commitment and capital mobility. We provide a new th...

Reputation, Bailouts, and Interest Rate Spread Dynamics

By Alessandro Dovis and Rishabh Kirpalani

American Economic Journal: Macroeconomics, July 2022

We propose a joint theory for interest rate dynamics and bailout decisions. Interest rate spreads are driven by time-varying fundamentals and expectations of future bailouts. Private agents are uncertain about the government's willingness to bail out and ...

Flexibility and Frictions in Multisector Models

By Jorge Miranda-Pinto and Eric R. Young

American Economic Journal: Macroeconomics, July 2022

We show that during the Great Recession, more-flexible sectors paid lower sectoral bond spreads. We rationalize this fact with a model with input-output linkages, heterogeneous elasticities, and binding working capital constraints in the use of intermedia...

The Propagation of Demand Shocks through Housing Markets

By Elliot Anenberg and Daniel Ringo

American Economic Journal: Macroeconomics, July 2022

Housing demand stimulus produces a multiplier effect by freeing up owners attempting to sell their current home, allowing them to reenter the market as buyers. Exploiting a shock to first-time home buyer demand caused by a cut in mortgage insurance premiu...

Cournot Fire Sales

By Thomas M. Eisenbach and Gregory Phelan

American Economic Journal: Macroeconomics, July 2022

In standard Walrasian macro-finance models, pecuniary externalities due to fire sales lead to excessive borrowing and insufficient liquidity holdings. We investigate whether imperfect competition (Cournot) improves welfare through internalizing the extern...