Credit Risk and Disaster Risk

By François Gourio

American Economic Journal: Macroeconomics, July 2013

Credit spreads are large, volatile, and countercyclical, and recent empirical work suggests that risk premia, not expected credit losses, are responsible for these features. Building on the idea that corporate debt, while fairly safe in ordinary recess...

The Worldwide Standard of Living since 1800

[Symposium: Looking Backward at Economics and the Economy]

By Richard A. Easterlin

Journal of Economic Perspectives, Winter 2000

By many measures a revolution in living conditions is sweeping the world. Most people today are better fed, clothed, and house than their predecessors two centuries ago. They are healthier, live longer, and are better educated. Women's lives are less cent...

Green Infrastructure: The Effects of Urban Rail Transit on Air Quality

By Yihsu Chen and Alexander Whalley

American Economic Journal: Economic Policy, February 2012

The transportation sector is a major source of air pollution worldwide, yet little is known about the effects of transportation infrastructure on air quality. This paper quantifies the effects of one major type of transportation infrastructure—urban...

Overconfident Consumers in the Marketplace

[Symposium: Overconfidence]

By Michael D. Grubb

Journal of Economic Perspectives, Fall 2015

The term overconfidence is used broadly in the psychology literature, referring to both overoptimism and overprecision. Overoptimistic individuals overestimate their own abilities or prospects. In contrast, overprecise individuals place overly narro...

Naïve Learning in Social Networks and the Wisdom of Crowds

By Benjamin Golub and Matthew O. Jackson

American Economic Journal: Microeconomics, February 2010

We study learning in a setting where agents receive independent noisy signals about the true value of a variable and then communicate in a network. They naïvely update beliefs by repeatedly taking weighted averages of neighbors' opinions. We show ...

The Evolution of Central Bank Governance around the World

[Symposium: Monetary Policy]

By Christopher Crowe and Ellen E. Meade

Journal of Economic Perspectives, Fall 2007

The past two decades have seen enormous changes in central banks and their practices. In some countries, older institutions have been fundamentally restructured. In other, such as the countries of the former Soviet Union, entirely new central banks have b...

Private and Public Provision of Counseling to Job Seekers: Evidence from a Large Controlled Experiment

By Luc Behaghel, Bruno Crépon, and Marc Gurgand

American Economic Journal: Applied Economics, October 2014

This paper reports the results of a large-scaled randomized controlled experiment comparing the public and private provision of counseling to job seekers. The intention-to-treat estimates of both programs are not statistically different, but more worke...

Interest Rates and Equity Extraction during the Housing Boom

By Neil Bhutta and Benjamin J. Keys

American Economic Review, July 2016

Credit record panel data from 1999-2010 indicates that the likelihood of home equity extraction (borrowing, on average, about $40,000 against one's home) peaked in 2003 when mortgage rates reached historic lows. We estimate a 27 percent rise in extraction...

Regional Redistribution through the US Mortgage Market

By Erik Hurst, Benjamin J. Keys, Amit Seru, and Joseph Vavra

American Economic Review, October 2016

Regional shocks are an important feature of the US economy. Households' ability to self-insure against these shocks depends on how they affect local interest rates. In the United States, most borrowing occurs through the mortgage market and is influenced ...

Quality and Accountability in Health Care Delivery: Audit-Study Evidence from Primary Care in India

By Jishnu Das, Alaka Holla, Aakash Mohpal, and Karthik Muralidharan

American Economic Review, December 2016

We present unique audit-study evidence on health care quality in rural India, and find that most private providers lacked medical qualifications, but completed more checklist items than public providers and recommended correct treatments equally often. Am...

Real Business Cycles in Emerging Countries?

By Javier García-Cicco, Roberto Pancrazi, and Martín Uribe

American Economic Review, December 2010

We use more than a century of Argentine and Mexican data to estimate the structural parameters of a small-open-economy real-business-cycle model driven by nonstationary productivity shocks. We find that the RBC model does a poor job of explaining business...

Online Higher Education: Beyond the Hype Cycle

[Symposium: Online Higher Education]

By Michael S. McPherson and Lawrence S. Bacow

Journal of Economic Perspectives, Fall 2015

When two Silicon Valley start-ups, Coursera and Udacity, embarked in 2012 on a bold effort to supply college-level courses for free over the Internet to learners worldwide, the notion of the Massively Open Online Course (MOOC) captured the nation's ...

The Long-Term Effects of UI Extensions on Employment

By Johannes F. Schmieder, Till von Wachter, and Stefan Bender

American Economic Review, May 2012

The majority of papers analyzing the employment effects of unemployment insurance (UI) benefit durations focus on the duration of the first unemployment spell. In this paper, we make two contributions. First, we use a regression discontinuity design to an...

A Skeptical View of Financialized Corporate Governance

[Symposium: The Modern Corporation]

By Anat R. Admati

Journal of Economic Perspectives, Summer 2017

Managerial compensation typically relies on financial yardsticks, such as profits, stock prices, and return on equity, to achieve alignment between the interests of managers and shareholders. But financialized governance may not actually work well for m...

Reset Price Inflation and the Impact of Monetary Policy Shocks

By Mark Bils, Peter J. Klenow, and Benjamin A. Malin

American Economic Review, October 2012

Many business cycle models use a flat short-run Phillips curve, due to time-dependent pricing and strategic complementarities, to explain fluctuations in real output. But, in doing so, these models predict unrealistically high persistence and stability of...

Buyer-Optimal Learning and Monopoly Pricing

By Anne-Katrin Roesler and Balázs Szentes

American Economic Review, July 2017

This paper analyzes a bilateral trade model where the buyer's valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-or-leave-it offer to the buyer. Our goal is to characterize those signal str...

Spring Forward at Your Own Risk: Daylight Saving Time and Fatal Vehicle Crashes

By Austin C. Smith

American Economic Journal: Applied Economics, April 2016

Daylight Saving Time (DST) impacts over 1.5 billion people, yet many of its impacts on practicing populations remain uncertain. Exploiting the discrete nature of DST transitions and a 2007 policy change, I estimate the impact of DST on fatal automobile cr...

The Mechanics of Motivated Reasoning

[Symposium: Motivated Beliefs]

By Nicholas Epley and Thomas Gilovich

Journal of Economic Perspectives, Summer 2016

Whenever we see voters explain away their preferred candidate's weaknesses, dieters assert that a couple scoops of ice cream won't really hurt their weight loss goals, or parents maintain that their children are unusually gifted, we are reminded that peop...

What Are Stock Investors’ Actual Historical Returns? Evidence from Dollar-Weighted Returns

By Ilia D. Dichev

American Economic Review, March 2007

The existing literature typically does not differentiate between security returns and the returns of investors in these securities. This study clarifies that investor and security returns differ because of the timing and magnitude of investor capital f...

Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872

By Richard Hornbeck and Daniel Keniston

American Economic Review, June 2017

Urban growth requires the replacement of outdated buildings, yet growth may be restricted when landowners do not internalize positive spillover effects from their own reconstruction. The Boston Fire of 1872 created an opportunity for widespread simultaneo...