Rational Inattention and the Business Cycle Effects of Productivity and News Shocks

By Bartosz Maćkowiak and Mirko Wiederholt

American Economic Journal: Macroeconomics, January 2025

We solve a real business cycle model with rational inattention (an RI-RBC model). In the RI-RBC model, the growth rates of employment, investment, and output are about as persistent as in the data, with an amount of inattention consistent with survey data...

Enemies of the People

By Gerhard Toews and Pierre-Louis Vézina

American Economic Journal: Macroeconomics, January 2025

The Soviet regime forcedly sent millions of enemies of the people, i.e. the educated elite considered a threat to the regime, to Gulag camps across the USSR. We use this large-scale episode of terror as a natural experiment to provide evidence on...

Spatial Integration and Agricultural Productivity: Quantifying the Impact of New Roads

By Tasso Adamopoulos

American Economic Journal: Macroeconomics, January 2025

I study the effects of Ethiopia's 1997–2014 road expansion program on agricultural productivity and structural change by combining a quantitative spatial sectoral framework with novel district-level panel data on agricultural production and geocoded tra...

State-Dependent Government Spending Multipliers: Downward Nominal Wage Rigidity and Sources of Business Cycle Fluctuations

By Yoon Joo Jo and Sarah Zubairy

American Economic Journal: Macroeconomics, January 2025

In a New Keynesian model with downward nominal wage rigidity (DNWR), we show that government spending is more effective in stimulating output in a low-inflation recession relative to a high-inflation recession. The government spending multiplier is large ...

Wealth Inequality, Aggregate Consumption, and Macroeconomic Trends under Incomplete Markets

By Byoungchan Lee

American Economic Journal: Macroeconomics, January 2025

I construct an incomplete market model featuring a closed-form expression for optimal consumption. In the model, individual consumption is an isoelastic function of wealth, inclusive of income, yielding partial consumption smoothing based on borrowing and...

Rigidity, Discretion, and the Costs of Writing Contracts

By Pierpaolo Battigalli and Giovanni Maggi

American Economic Review, September 2002

In this paper we model contract incompleteness "from the ground up," as arising endogenously from the costs of describing the environment and the parties' behavior. Optimal contracts may exhibit two forms of incompleteness: discretion, meaning that the co...

Front Matter

American Economic Journal: Microeconomics, February 2025

The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies

By Sharat Ganapati

American Economic Journal: Microeconomics, February 2025

Half of all transactions in the $6 trillion market for manufactured goods in the United States were intermediated by wholesalers in 2012, up from 32 percent in 1992. Seventy percent of this increase is due to the growth of "superstar" firms—the largest ...

Contractual Structure and Wealth Accumulation

By Dilip Mookherjee and Debraj Ray

American Economic Review, September 2002

Can historical wealth distributions affect long-run output and inequality despite "rational" saving, convex technology and no externalities? We consider a model of equilibrium short-period financial contracts, where poor agents face credit constraints owi...

The Inner Workings of a Hub-and-Spoke Cartel in the Automotive Fuel Industry

By Daniel Chaves and Marco Duarte

American Economic Journal: Microeconomics, February 2025

We study the inner workings of a hub-and-spoke cartel in the Brazilian automotive fuel industry. Based on court documents and detailed price and sales data, we discuss how gas station owners (spokes) operating inside the federal capital received help from...

A Random Dictator Is All You Need

By Itai Arieli, Yakov Babichenko, Inbal Talgam-Cohen, and Konstantin Zabarnyi

American Economic Journal: Microeconomics, February 2025

We study information aggregation with a decision-maker aggregating binary recommendations from symmetric agents. Each agent's recommendation depends on her private information about a hidden state. While the decision-maker knows the prior distribution ove...

Scoring Strategic Agents

By Ian Ball

American Economic Journal: Microeconomics, February 2025

I introduce a model of predictive scoring. A receiver wants to predict a sender's quality. An intermediary observes multiple features of the sender and aggregates them into a score. Based on the score, the receiver makes a decision. The sender prefers "hi...

Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation, and Application to Job Search

By Michèle Belot, Philipp Kircher, and Paul Muller

American Economic Journal: Microeconomics, February 2025

We propose a simple method for eliciting individual time preferences without estimating utility functions even in settings where background consumption changes over time. It relies on eliciting preferences for receiving high stakes lottery tickets at diff...

One Man, One Vote

By Romans Pancs and Tridib Sharma

American Economic Journal: Microeconomics, February 2025

In the United States, electoral districts must be equipopulous. This requirement is known as the one man, one vote doctrine. We propose welfare-based justifications for this requirement under the economic view, according to which voters care about the pol...

Commitment and Conflict in Unanimity Bargaining

By Topi Miettinen and Christoph Vanberg

American Economic Journal: Microeconomics, February 2025

We theoretically investigate how the application of unanimity rule can lead to inefficient delay in collective decision-making. We do so in the context of a distributive multilateral bargaining model featuring strategic precommitment. Prior to each bargai...

Estimating Models of Supply and Demand: Instruments and Covariance Restrictions

By Alexander MacKay and Nathan H. Miller

American Economic Journal: Microeconomics, February 2025

We consider the identification of empirical models of supply and demand with imperfect competition. We show that a restriction on the covariance between unobserved demand and cost shocks can resolve endogeneity and identify the price parameter. We demonst...

Triplet Embeddings for Demand Estimation

By Lorenzo Magnolfi, Jonathon McClure, and Alan Sorensen

American Economic Journal: Microeconomics, February 2025

We propose a method to augment conventional demand estimation approaches with crowd-sourced data on the product space. Our method obtains triplets data ("product A is closer to B than it is to C") from an online survey to compute an embedding—i.e., a lo...

Long-Term Relationships in the US Truckload Freight Industry

By Adam Harris and Thi Mai Anh Nguyen

American Economic Journal: Microeconomics, February 2025

This paper provides evidence on the scope and incentive mechanisms of long-term relationships in the US truckload freight industry. In this setting, shippers and carriers engage in repeated interactions under fixed-rate contracts that allow for inefficien...

Eliciting Ambiguity with Mixing Bets

By Patrick Schmidt

American Economic Journal: Microeconomics, February 2025

Preferences for mixing can reveal ambiguity perception and attitude on a single event. The validity of the approach is discussed for multiple preference classes, including maxmin, maxmax, variational, and smooth second-order preferences. An experimental i...

Monitoring, Motivation, and Management: The Determinants of Opportunistic Behavior in a Field Experiment

By Daniel S. Nagin, James B. Rebitzer, Seth Sanders, and Lowell J. Taylor

American Economic Review, September 2002

Economic models of incentives in employment relationships are based on a specific theory of motivation: employees are "rational cheaters," who anticipate the consequences of their actions and shirk when the marginal benefits exceed costs. We investigate t...