Unconventional Fiscal Policy at Work

By Rüdiger Bachmann, Benjamin Born, Olga Goldfayn-Frank, Georgi Kocharkov, Ralph Luetticke, and Michael Weber

AEA Papers and Proceedings, May 2023

In an effort to stabilize the economy during the COVID-19 pandemic, the German government reduced value-added taxes (VAT) by 3 percentage points for a period of six months in the latter half of 2020. This measure resulted in a boost in aggregate consumer ...

Interest Rates and World Trade: An "Austrian" Perspective

By Pol Antràs

AEA Papers and Proceedings, May 2023

I develop a framework to study the interplay between world trade and interest rates. The model incorporates an explicit notion of time and production length, in the "Austrian" tradition of Bohm-Bawerk (1889). Changes in the interest rate affect production...

The Trickling Up of Excess Savings

By Adrien Auclert, Matthew Rognlie, and Ludwig Straub

AEA Papers and Proceedings, May 2023

We provide a simple framework connecting the distribution of excess savings across households to the dynamics of aggregate demand. Deficit-financed fiscal transfers generate excess savings. The poorest households with the highest marginal propensities to ...

Foundations of Human Sociality: A Review Essay

By Larry Samuelson

Journal of Economic Literature, June 2005

This is a review article of Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies (Oxford University Press 2004) edited by Joseph Henrich, Robert Boyd, Samuel Bowles, Colin Camerer, Erns...

Quantifying the Inflationary Impact of Fiscal Stimulus under Supply Constraints

By Julian di Giovanni, Şebnem Kalemli-Özcan, Alvaro Silva, and Muhammed A. Yıldırım

AEA Papers and Proceedings, May 2023

This paper builds on Baqaee and Farhi (2022) and di Giovanni et al. (2022) to quantify the contribution of fiscal policy on US inflation over the December 2019 to June 2022 period. Model calibrations show that aggregate demand shocks explain roughly two-t...

Measuring the Share of Imports in Final Consumption

By Emmanuel Dhyne, Ayumu Ken Kikkawa, Magne Mogstad, and Felix Tintelnot

AEA Papers and Proceedings, May 2023

We use Belgian data on domestic firm-to-firm transactions and ask how the measurement of the share of imports in final consumption is affected when one uses data recorded at higher levels of aggregation. We find that aggregating detailed firm-to-firm tran...

Sprouting Cities: How Rural America Industrialized

By Fabian Eckert, John Juneau, and Michael Peters

AEA Papers and Proceedings, May 2023

We study the joint process of urbanization and industrialization in the US economy between 1880 and 1940. We show that only a small share of aggregate industrialization is accounted for by the relocation of workers from remote rural areas to industrial hu...

New Measurement of Export Participation in US Manufacturing

By Christoph E. Boehm, Aaron Flaaen, and Nitya Pandalai-Nayar

AEA Papers and Proceedings, May 2023

We measure export participation rates in the US manufacturing sector using a new administrative dataset and compare them to participation rates constructed from the commonly used census of manufacturers (CM). At both the establishment and firm levels, exp...

Market Power, Financial Constraints, and Monetary Transmission

By Romain Duval, Davide Furceri, Raphael Lee, and Marina M. Tavares

AEA Papers and Proceedings, May 2023

There is growing evidence that corporate market power is increasing and affecting monetary policy transmission. This paper develops a partial equilibrium model that highlights the role of financial constraints in shaping the role of markups for the respon...

Monetary Policy, Market Power, and SMEs

By Annalisa Ferrando, Peter McAdam, Filippos Petroulakis, and Xavier Vives

AEA Papers and Proceedings, May 2023

Monetary policy aims to affect corporate borrowing by influencing the marginal costs of firms, but its potency can be conditioned by the degree of market competition. We first identify conditions under which changes in marginal costs have different effect...

The Wage Phillips Curve under Labor Market Power

By Anastasia Burya, Rui Mano, Yannick Timmer, and Anke Weber

AEA Papers and Proceedings, May 2023

Using the near universe of online vacancy postings in the United States, we explore linkages between labor market power and the trade-off between unemployment and wages. We estimate the Phillips curve at the commuting zone level and find that the relation...

China in Tax Havens

By Christopher Clayton, Antonio Coppola, Amanda Dos Santos, Matteo Maggiori, and Jesse Schreger

AEA Papers and Proceedings, May 2023

We document the rise of China in offshore capital markets. Chinese firms use global tax havens to access foreign capital in both equity and bond markets. In the last 20 years, China's presence went from raising a negligible amount of capital in these mark...

The Secular Decrease in UK Safe Asset Market Power

By Jason Choi, Duong Dang, Rishabh Kirpalani, and Diego J. Perez

AEA Papers and Proceedings, May 2023

We document the decline in market power of the United Kingdom in safe assets and quantify the resulting losses. We estimate an increasing elasticity of demand for UK public debt during the latter half of the twentieth century. This is in sharp contrast to...

The Stock Connect to China

By Zhiguo He, Yuehan Wang, and Xiaoquan Zhu

AEA Papers and Proceedings, May 2023

As a bridge between Chinese mainland and international financial markets, the Stock Connect program allows investors on both sides to gain mutual access. By analyzing how cross-border flows respond to macro-related shocks, we show that compared with possi...

Book Reviews

Journal of Economic Literature, June 2005

Debt Distress on China's Belt and Road

By Sebastian Horn, Bradley C. Parks, Carmen M. Reinhart, and Christoph Trebesch

AEA Papers and Proceedings, May 2023

This paper shows that China's lending boom to developing country sovereigns has largely ended and that debt distress and defaults are increasingly common. Chinese lenders react to this challenge through two main coping strategies: first, bilateral soverei...

Timely Business Dynamics Using Google Places

By Thibaut Duprey, Daniel E. Rigobon, Artur Kotlicki, and Philip Schnattinger

AEA Papers and Proceedings, May 2023

We introduce a new real-time method to measure business opening and closure rates by relying on Google Places, the data behind the Google Maps platform. We collect data on establishments of customer-facing industries (food, retail, accommodation) and prov...

Measuring Business Trends and Outlook through a New Survey

By Catherine Buffington, Lucia Foster, and Colin Shevlin

AEA Papers and Proceedings, May 2023

The Census Bureau's new Business Trends and Outlook Survey (BTOS) provides timely information from businesses on their current trends and expectations over core concepts such as prices, employment, and revenue. The BTOS collects qualitative information in...

Payroll Employment at the Weekly Frequency

By Tomaz Cajner, Leland D. Crane, Ryan A. Decker, Adrian Hamins-Puertolas, and Christopher Kurz

AEA Papers and Proceedings, May 2023

Nontraditional data can provide critical economic insights in real time. We document the development of weekly employment indexes based on microdata from the payroll processor ADP. These data have provided insights into labor market developments in the fa...

Are Business Applications Early Economic Indicators?

By Jose Asturias, Emin Dinlersoz, John Haltiwanger, and Rebecca Hutchinson

AEA Papers and Proceedings, May 2023

Are business applications early indicators of economic activity? Our analysis indicates that monthly year-over-year growth in applications for likely employer businesses significantly leads growth in total nonfarm employment and has a positive correlation...