Amplification and Asymmetric Effects without Collateral Constraints

By Dan Cao and Guangyu Nie

American Economic Journal: Macroeconomics, July 2017

The seminal contribution by Kiyotaki and Moore (1997) has spurred a vast literature on the importance of collateral constraints in propagating and amplifying shocks to the economy. However, most papers in the literature using collateral constraints assume...

Misallocation, Establishment Size, and Productivity

By Pedro Bento and Diego Restuccia

American Economic Journal: Macroeconomics, July 2017

We consider a model of heterogeneous production units with endogenous entry and productivity investment to assess the quantitative impact of policy distortions: when the productivity elasticity of distortions increases from 0.09 in the United States to 0....

Front Matter

American Economic Review, July 2017

Includes "Glenn C. Loury: Distinguished Fellow"

Incomplete Contracts and Control

By Oliver Hart

American Economic Review, July 2017

Pay for Performance and Beyond

By Bengt Holmström

American Economic Review, July 2017

Incentives are often associated with narrow financial rewards such as bonuses or executive stock options. But in general such rewards are just a small part of the design of incentives. Properly designed incentive systems have to take into account the full...

Knowledge of Future Job Loss and Implications for Unemployment Insurance

By Nathaniel Hendren

American Economic Review, July 2017

This paper studies the implications of individuals' knowledge of future job loss for the existence of an unemployment insurance (UI) market. Learning about job loss leads to consumption decreases and spousal labor supply increases. This suggests existing ...

Estimating Dynamic Games of Electoral Competition to Evaluate Term Limits in US Gubernatorial Elections

By Holger Sieg and Chamna Yoon

American Economic Review, July 2017

This paper shows how to identify and estimate, using standard semi-parametric techniques, a class of dynamic games with perfect monitoring, that have been at the frontier of recent research in political economy. The empirical analysis provides novel quant...

The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists

By Enrico Moretti and Daniel J. Wilson

American Economic Review, July 2017

We quantify how sensitive is migration by star scientists to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal and corporate taxes on star scientists' migration patterns...

Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone

By Philippe Martin and Thomas Philippon

American Economic Review, July 2017

We provide a comprehensive account of the dynamics of eurozone countries from 2000 to 2012. We analyze private leverage, fiscal policy, labor costs, and spreads, and we propose a model and an identification strategy to separate the impact of credit cycles...

Investment Banks as Corporate Monitors in the Early Twentieth Century United States

By Carola Frydman and Eric Hilt

American Economic Review, July 2017

We study the effect of financial relationships on firms' investment decisions and access to external finance. In the early twentieth century, securities underwriters commonly held directorships with American corporations. Section 10 of the Clayton Antitru...

The Empirical Implications of the Interest-Rate Lower Bound

By Christopher Gust, Edward Herbst, David López-Salido, and Matthew E. Smith

American Economic Review, July 2017

Using Bayesian methods, we estimate a nonlinear DSGE model in which the interest-rate lower bound is occasionally binding. We quantify the size and nature of disturbances that pushed the US economy to the lower bound in late 2008 as well as the contributi...

Information Spillovers in Asset Markets with Correlated Values

By Vladimir Asriyan, William Fuchs, and Brett Green

American Economic Review, July 2017

We study information spillovers in a dynamic setting with correlated assets owned by privately informed sellers. In the model, a trade of one asset can provide information about the value of other assets. Importantly, the information content of trading be...

Contracts as a Barrier to Entry in Markets with Nonpivotal Buyers

By Özlem Bedre-Defolie and Gary Biglaiser

American Economic Review, July 2017

Considering markets with nonpivotal buyers, we analyze the anticompetitive effects of breakup fees used by an incumbent facing a more efficient entrant in the future. Buyers differ in their intrinsic switching costs. Breakup fees are profitably used to fo...

Buyer-Optimal Learning and Monopoly Pricing

By Anne-Katrin Roesler and Balázs Szentes

American Economic Review, July 2017

This paper analyzes a bilateral trade model where the buyer's valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-or-leave-it offer to the buyer. Our goal is to characterize those signal str...

Separations, Sorting, and Cyclical Unemployment

By Andreas I. Mueller

American Economic Review, July 2017

This paper establishes a new fact about the compositional changes in the pool of unemployed over the US business cycle. Using micro-data from the Current Population Survey for the years 1962-2012, it documents that in recessions the pool of unemployed shi...

Front Matter

Journal of Economic Perspectives, Summer 2017

International Monetary Relations: Taking Finance Seriously

[Symposium: The Global Monetary System]

By Maurice Obstfeld and Alan M. Taylor

Journal of Economic Perspectives, Summer 2017

In this essay, we highlight the interactions of the international monetary system with financial conditions, not just with the output, inflation, and balance of payments goals usually discussed. We review how financial conditions and outright financial cr...

The Safe Assets Shortage Conundrum

[Symposium: The Global Monetary System]

By Ricardo J. Caballero, Emmanuel Farhi, and Pierre-Olivier Gourinchas

Journal of Economic Perspectives, Summer 2017

A safe asset is a simple debt instrument that is expected to preserve its value during adverse systemic events. The supply of safe assets, private and public, has historically been concentrated in a small number of advanced economies, most prominently t...

Dealing with Monetary Paralysis at the Zero Bound

[Symposium: The Global Monetary System]

By Kenneth Rogoff

Journal of Economic Perspectives, Summer 2017

Recently, the key constraint for central banks is the zero lower bound on nominal interest rates. Central banks fear that if they push short-term policy interest rates too deeply negative, there will be a massive flight into paper currency. This paper...

Is the US Public Corporation in Trouble?

[Symposium: The Modern Corporation]

By Kathleen M. Kahle and René M. Stulz

Journal of Economic Perspectives, Summer 2017

We examine the current state of the US public corporation and how it has evolved over the last 40 years. After falling by 50 percent since its peak in 1997, the number of public corporations is now smaller than 40 years ago. These corporations are now...