Keeping Up with "The Joneses": Reference-Dependent Choice with Social Comparisons

By Alastair Langtry

American Economic Journal: Microeconomics, August 2023

Keeping up with "The Joneses" matters. This paper examines a model of reference-dependent choice where reference points are determined by social comparisons. An increase in the strength of social comparisons, even by only a few agents, increases consumpti...

The Impact of Economic Conditions on Participation in Disability Programs: Evidence from the Coal Boom and Bust

By Dan Black, Kermit Daniel, and Seth Sanders

American Economic Review, March 2002

We examine the impact of the coal boom of the 1970's and the coal bust of the 1980's on disability program participation. These shocks provide clear evidence that as the value of labor-market participation increases, disability program participation falls...

Disclosure in Markets for Ratings

By Ran Weksler and Boaz Zik

American Economic Journal: Microeconomics, August 2023

We study the implications of the disclosure regime of ratings on the level of information released to the public. Specifically, we compare mandatory and voluntary disclosure. We analyze a model where the potential issuers are initially endowed with homoge...

Decreasing Impatience

By Christopher P. Chambers, Federico Echenique, and Alan D. Miller

American Economic Journal: Microeconomics, August 2023

We characterize decreasing impatience, a common behavioral phenomenon in intertemporal choice. Discount factors that display decreasing impatience are characterized through a convexity axiom for investments at fixed interest rates. Then we show that they ...

Bounds on a Slope from Size Restrictions on Economic Shocks

By Marco Stenborg Petterson, David Seim, and Jesse M. Shapiro

American Economic Journal: Microeconomics, August 2023

We study the problem of learning about the effect of one market-level variable (e.g., price) on another (e.g., quantity) in the presence of shocks to unobservables (e.g., preferences). We show that economic intuitions about the plausible size of the shock...

Insuring Consumption Against Illness

By Paul Gertler and Jonathan Gruber

American Economic Review, March 2002

One of the most sizable and least predictable shocks to economic opportunities in developing countries is major illness. We investigate the extent to which families are able to insure consumption against major illness using a unique panel data set from In...

Front Matter

American Economic Review, August 2023

Does Identity Affect Labor Supply?

By Suanna Oh

American Economic Review, August 2023

How does identity influence economic behavior in the labor market? I investigate this question in rural India, focusing on the effect of caste identity on job-specific labor supply. In a field experiment, laborers choose whether to take up various job off...

The Reversal Interest Rate

By Joseph Abadi, Markus Brunnermeier, and Yann Koby

American Economic Review, August 2023

The reversal interest rate is the rate at which accommodative monetary policy reverses and becomes contractionary for lending. We theoretically demonstrate its existence in a macroeconomic model featuring imperfectly competitive banks that face financial ...

Individuals and Organizations as Sources of State Effectiveness

By Michael Carlos Best, Jonas Hjort, and David Szakonyi

American Economic Review, August 2023

Bureaucrats implement policy. How important are they for a state's productivity? And do the trade-offs between policies depend on their effectiveness? Using data on 16 million public purchases in Russia, we show that 39 percent of the variation in prices ...

The Political Economy of International Regulatory Cooperation

By Giovanni Maggi and Ralph Ossa

American Economic Review, August 2023

We examine international regulatory agreements that are negotiated under lobbying pressures from producer groups. The way in which lobbying influences the cooperative setting of regulatory policies, as well as the welfare impacts of international agreemen...

Endogenous Federal Grants and Crowd-out of State Government Spending: Theory and Evidence from the Federal Highway Aid Program

By Brian Knight

American Economic Review, March 2002

Contrary to simple theoretical predictions, existing evidence suggests that federal grants do not crowd out state government spending. A legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and prefer...

The Micro Anatomy of Macro Consumption Adjustments

By Rafael Guntin, Pablo Ottonello, and Diego J. Perez

American Economic Review, August 2023

We study crises characterized by large adjustments of aggregate consumption through their microlevel patterns. We document the cross-sectional patterns of consumption adjustment across the income distribution and find large adjustments for top-income hous...

The Missing Intercept: A Demand Equivalence Approach

By Christian K. Wolf

American Economic Review, August 2023

I give conditions under which changes in private spending are accommodated in general equilibrium exactly like changes in aggregate fiscal expenditure. Under such demand equivalence, researchers can use time series evidence on fiscal multipliers to recove...

Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms: Comment

By Clément Malgouyres, Thierry Mayer, and Clément Mazet-Sonilhac

American Economic Review, August 2023

Suarez Serrato and Zidar (2016) identify state corporate tax incidence in a spatial equilibrium model with imperfectly mobile firms. Their identification argument rests on comparative statics omitting a channel implied by their model: the link between com...

Front Matter

American Economic Journal: Economic Policy, August 2023

Sin Taxes and Self-Control

By Renke Schmacker and Sinne Smed

American Economic Journal: Economic Policy, August 2023

According to theory, "sin taxes" are welfare improving if consumers with low self-control respond at least as much to the tax as consumers with high self-control. We investigate empirically if demand response to soft drink and fat tax variations in Denmar...

Special Economic Zones and Human Capital Investment: 30 Years of Evidence from China

By Fangwen Lu, Weizeng Sun, and Jianfeng Wu

American Economic Journal: Economic Policy, August 2023

By exploiting the large quantity and rich variety of special economic zones (SEZs) in China, this study investigates how such zones affect human capital investment. Results show that SEZs significantly increase the local high school enrollment rate, but t...

Common Practice: Spillovers from Medicare on Private Health Care

By Michael L. Barnett, Andrew Olenski, and Adam Sacarny

American Economic Journal: Economic Policy, August 2023

Efforts to raise US health-care productivity have proceeded slowly, potentially due to the fragmentation of payment across insurers. Each insurer's efforts to improve care could influence how doctors practice for other insurers, leading to unvalued extern...

Spending Responses to High-Frequency Shifts in Payment Timing: Evidence from the Earned Income Tax Credit

By Aditya Aladangady, Shifrah Aron-Dine, David Cashin, Wendy Dunn, Laura Feiveson, Paul Lengermann, Katherine Richard, and Claudia Sahm

American Economic Journal: Economic Policy, August 2023

This study explores the spending response to tax refunds for Earned Income Tax Credit recipients using a novel dataset combining transaction-based measures of retail spending with administrative IRS data on tax refunds. Our dataset allows us to exploit va...