Trade Agreements and Enforcement: Evidence from WTO Dispute Settlement

By Chad P. Bown and Kara M. Reynolds

American Economic Journal: Economic Policy, November 2017

This paper examines implications of the terms-of-trade theory for the determinants of outcomes arising under the enforcement provisions of international agreements. Like original trade agreement negotiations, formal trade dispute negotiations are modeled ...

Trade Shocks and the Provision of Local Public Goods

By Leo Feler and Mine Z. Senses

American Economic Journal: Economic Policy, November 2017

We analyze the impact of trade-induced income shocks on the size of local government and the provision of public services. Areas in the United States with declining labor demand and incomes due to increasing import competition from China experience relati...

Causal Spousal Health Spillover Effects and Implications for Program Evaluation

By Jason Fletcher and Ryne Marksteiner

American Economic Journal: Economic Policy, November 2017

Current methods of cost effectiveness analysis implicitly assume zero spillovers among social ties. This can underestimate the benefits of health interventions and misallocate resources toward interventions with lower comprehensive effects. We discuss the...

Payment Size, Negative Equity, and Mortgage Default

By Andreas Fuster and Paul S. Willen

American Economic Journal: Economic Policy, November 2017

This paper studies the treatment effect of monthly payment size on mortgage default, using a sample of adjustable-rate loans that experienced large payment reductions thanks to the recent low interest rate environment. Payment size has an economically lar...

Power to Choose? An Analysis of Consumer Inertia in the Residential Electricity Market

By Ali Hortaçsu, Seyed Ali Madanizadeh, and Steven L. Puller

American Economic Journal: Economic Policy, November 2017

Many jurisdictions around the world have deregulated utilities and opened retail markets to competition. However, inertial decision making can diminish consumer benefits of retail competition. Using household-level data from the Texas residential electric...

Consumers' Response to State Energy Efficient Appliance Rebate Programs

By Sébastien Houde and Joseph E. Aldy

American Economic Journal: Economic Policy, November 2017

Through an evaluation of the 2009 Recovery Act's State Energy Efficient Appliance Rebate Program, this paper examines consumers' response to energy efficiency rebates. The analysis shows that 70 percent of consumers claiming a rebate were inframarginal an...

Does Money Matter in the Long Run? Effects of School Spending on Educational Attainment

By Joshua Hyman

American Economic Journal: Economic Policy, November 2017

This paper measures the effect of increased primary school spending on students' college enrollment and completion. Using student-level panel administrative data, I exploit variation in the school funding formula imposed by Michigan's 1994 school finance ...

Fiscal Externalities and Optimal Unemployment Insurance

By Nicholas Lawson

American Economic Journal: Economic Policy, November 2017

A common finding of the optimal unemployment insurance (UI) literature is that the optimal replacement rate is around 50 percent; however, a key assumption is that UI is the only government spending activity. I show that optimal UI levels may be dramatica...

Liquidity Constraints, Fiscal Externalities, and Optimal Tuition Subsidies

By Nicholas Lawson

American Economic Journal: Economic Policy, November 2017

A large literature focuses on two important rationales for government subsidies to college students: positive fiscal externalities from a larger tax base, and liquidity constraints. This paper provides a first attempt to gauge the relative importance of t...

Beggar-Thy-Neighbor Effects of Exchange Rates: A Study of the Renminbi

By Aaditya Mattoo, Prachi Mishra, and Arvind Subramanian

American Economic Journal: Economic Policy, November 2017

This paper estimates the effect of China's exchange rate changes on exports of developing countries in third markets. The degree of competition between China and its developing country competitors in specific products and destinations plays a key role in ...

The Persistent Reduction in Poverty from Filing a Tax Return

By Shanthi P. Ramnath and Patricia K. Tong

American Economic Journal: Economic Policy, November 2017

Low-income households not required to file often fail to receive benefits provided through the tax code. In 2008, the US government made people with at least $3,000 in earnings eligible for a stimulus payment if they filed a tax return. Using eligibility ...

Behavioral Responses to Wealth Taxes: Evidence from Sweden

By David Seim

American Economic Journal: Economic Policy, November 2017

This paper provides an empirical assessment of an annual wealth tax. Using Swedish administrative data, I estimate net-of-tax-rate elasticities of taxable wealth in the range [0.09, 0.27]. Cross-checking self-reported assets against asset data unavailable...

Front Matter

American Economic Review, November 2017

Obviously Strategy-Proof Mechanisms

By Shengwu Li

American Economic Review, November 2017

A strategy is obviously dominant if, for any deviation, at any information set where both strategies first diverge, the best outcome under the deviation is no better than the worst outcome under the dominant strategy. A mechanism is obviously strategy-p...

'Acting Wife': Marriage Market Incentives and Labor Market Investments

By Leonardo Bursztyn, Thomas Fujiwara, and Amanda Pallais

American Economic Review, November 2017

Do single women avoid career-enhancing actions because these actions signal undesirable traits, like ambition, to the marriage market? While married and unmarried female MBA students perform similarly when their performance is unobserved by classmates (...

Decentralized Exchange

By Semyon Malamud and Marzena Rostek

American Economic Review, November 2017

Most assets are traded in multiple interconnected trading venues. This paper develops an equilibrium model of decentralized markets that accommodates general market structures with coexisting exchanges. Decentralized markets can allocate risk among trad...

Discriminatory Information Disclosure

By Hao Li and Xianwen Shi

American Economic Review, November 2017

A seller designs a mechanism to sell a single object to a potential buyer whose private type is his incomplete information about his valuation. The seller can disclose additional information to the buyer about his valuation without observing its realiza...

The Consumption Effects of the 2007–2008 Financial Crisis: Evidence from Households in Denmark

By Thais Lærkholm Jensen and Niels Johannesen

American Economic Review, November 2017

Did the financial crisis in 2007–2008 spread from distressed banks to households through a contraction of the credit supply? We study this question with a dataset that contains observations on all accounts in Danish banks as well as comprehensive ...

Housing Wealth and Consumption: Evidence from Geographically-Linked Microdata

By Aditya Aladangady

American Economic Review, November 2017

Rising home values also raise the cost of living, offsetting their impact on consumption. However, additional home equity collateral can loosen borrowing constraints, increasing spending for households that value their current endowment of housing highl...

Gross Worker Flows over the Business Cycle

By Per Krusell, Toshihiko Mukoyama, Richard Rogerson, and Ayşegül Şahin

American Economic Review, November 2017

We build a hybrid model of the aggregate labor market that features both standard labor supply forces and frictions in order to study the cyclical properties of gross worker flows across the three labor market states: employment, unemployment, and nonpa...