Ambiguity Aversion: Implications for the Uncovered Interest Rate Parity Puzzle

By Cosmin Ilut

American Economic Journal: Macroeconomics, July 2012

High interest rate currencies tend to appreciate in the future relative to low interest rate currencies instead of depreciating as uncovered interest parity (UIP) predicts. I construct a model of exchange rate determination in which ambiguity-averse agent...

Growth-Rate and Uncertainty Shocks in Consumption: Cross-Country Evidence

By Emi Nakamura, Dmitriy Sergeyev, and Jón Steinsson

American Economic Journal: Macroeconomics, January 2017

We provide new estimates of the importance of growth-rate shocks and uncertainty shocks for developed countries. The shocks we estimate are large and correspond to well-known macroeconomic episodes such as the Great Moderation and the productivity slowdow...

The Dynamic Behavior of the Real Exchange Rate in Sticky Price Models

By Jón Steinsson

American Economic Review, March 2008

Existing empirical evidence suggests that real exchange rates exhibit hump-shaped dynamics. I show that this is a robust fact across nine large, developed economies. This fact can help explain why sticky price business cycle models have been unable to mat...

A Model of Positive Self-Image in Subjective Assessments

By Luís Santos-Pinto and Joel Sobel

American Economic Review, December 2005

This paper suggests a mechanism that describes individuals' positive self-image in subjective assessments of their relative abilities. The mechanism assumes individuals have heterogeneous production functions that determine ability as a function of multip...

The Econometrics of Matching Models

By Pierre-André Chiappori and Bernard Salanié

Journal of Economic Literature, September 2016

Many questions in economics can be fruitfully analyzed in the framework of matching models. Until recently, empirical work has lagged far behind theory in this area. This review reports on recent developments that have considerably expanded the range of m...

The Efficacy of Information Policy: A Review of Archon Fung, Mary Graham, and David Weil's Full Disclosure: The Perils and Promise of Transparency

By Clifford Winston

Journal of Economic Literature, September 2008

The economics of information has identified an important role for government to correct situations where competition is not sufficient to reveal valuable information to consumers. Archon Fung, Mary Graham, and David Weil's Full Disclosure: The Perils a...

Okun's Law and Productivity Innovations

By Robert J. Gordon

American Economic Review, May 2010

Nobel Laureate: The Many Other Allais Paradoxes

By Bertrand R. Munier

Journal of Economic Perspectives, Spring 1991

Maurice Allais is know for the 1952 "Allais paradox," but other very important parts of his work remain virtually unknown to most economists. As Paul Samuelson (1983) wrote, "Had Allais' earliest writings been in English, a whole generation of economic th...

$1,000 Cash Back: The Pass-Through of Auto Manufacturer Promotions

By Meghan Busse, Jorge Silva-Risso, and Florian Zettelmeyer

American Economic Review, September 2006

Automobile manufacturers frequently use promotions involving cash incentives. While payments are nominally directed to either customers or dealers, the ultimate beneficiary of the promotion depends on the outcome of price negotiation. We use program ev...

The Effects of Job Corps Training on Wages of Adolescents and Young Adults

By German Blanco, Carlos A. Flores, and Alfonso Flores-Lagunes

American Economic Review, May 2013

Previous evaluations of Job Corps document disparate effects on the earnings of adolescents (aged 16-19) and young adults (aged 20-24). These are conjectured to be due to differential human capital accumulation within the program between these groups. If ...

On the Evolution of the World Income Distribution

[Symposium: Distribution of World Income]

By Charles I. Jones

Journal of Economic Perspectives, Summer 1997

The post-World War I period has seen substantial changes in the world income distribution. As a result, the shape of the distribution has changed from something that looks like a normal distribution in 1960 to a bimodal 'twin peaks' distribution in 1988. ...

The Bidder's Curse: Comment

By Henry S. Schneider

American Economic Review, April 2016

The prices of auctions on eBay often exceed eBay's fixed-price "Buy- It-Now" prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained "without al...

Recommendations for Further Reading

By Timothy Taylor

Journal of Economic Perspectives, Winter 2014

Adverse Selection in Durable Goods Markets

By Igal Hendel and Alessandro Lizzeri

American Economic Review, December 1999

We present a dynamic model of adverse selection to examine the interactions between new and used goods markets. We find that the used market never shuts down, the volume of trade can be large, and distortions are lower than previously thought. New cars pr...

Changes in Transportation Infrastructure and Commuting Patterns in US Metropolitan Areas, 1960-2000

By Nathaniel Baum-Snow

American Economic Review, May 2010

Risk and Precautionary Saving in Two-Person Households

By Patricia Apps, Yuri Andrienko, and Ray Rees

American Economic Review, March 2014

The existing literature on precautionary saving is based almost entirely on the assumption that the household acts as if it consisted of a single individual decision-taker. In reality saving decisions are typically taken by two-person households. This p...

Looking into the Black Box: A Survey of the Matching Function

By Barbara Petrongolo and Christopher A. Pissarides

Journal of Economic Literature, June 2001

This paper surveys the microfoundations, empirical evidence, and estimation issues underlying the aggregate matching function. There is no consensus yet on microfoundations but one is emerging on estimation. An aggregate, constant returns, Cobb-Douglas ma...

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...

Hit or Miss? The Effect of Assassinations on Institutions and War

By Benjamin F. Jones and Benjamin A. Olken

American Economic Journal: Macroeconomics, July 2009

Assassinations are a persistent feature of the political landscape. Using a new dataset of assassination attempts on all world leaders from 1875 to 2004, we exploit inherent randomness in the success or failure of assassination attempts to identify the...

The Market for Corporate Control: The Empirical Evidence Since 1980

[Symposium: Takeovers]

By Gregg A. Jarrell, James A. Brickley, and Jeffry M. Netter

Journal of Economic Perspectives, Winter 1988

In the 1980s, the market for corporate control has been increasingly active, and the quantity of output of academic researchers studying corporate control questions has mirrored the market activity. This review examines the returns to bidders and targets,...