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Urban growth requires the replacement of outdated buildings, yet growth may be restricted when landowners do not internalize positive spillover effects from their own reconstruction.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...

Evidence Games: Truth and Commitment

By Sergiu Hart, Ilan Kremer, and Motty Perry

American Economic Review, March 2017

An evidence game is a strategic disclosure game in which an informed agent who has some pieces of verifiable evidence decides which ones to disclose to an uninformed principal who chooses a reward. The agent, regardless of his information, prefers the rew...

From Malthusian Stagnation to Modern Growth

By Oded Galor and David N. Weil

American Economic Review, May 1999

Conveniently Upset: Avoiding Altruism by Distorting Beliefs about Others' Altruism

By Rafael Di Tella, Ricardo Perez-Truglia, Andres Babino, and Mariano Sigman

American Economic Review, November 2015

We present results from a "corruption game" (a dictator game modified so that recipients can take a side payment in exchange for accepting a reduction in the overall size of the pie). Dictators (silently) treated to be able to take more of the recipient's...

Tricks with Hicks: The EASI Demand System

By Arthur Lewbel and Krishna Pendakur

American Economic Review, June 2009

We invent Implicit Marshallian demands, which combine desirable features of Hicksian and Marshallian demands. We propose and estimate the Exact Affine Stone Index (EASI) implicit Marshallian demand system. Like the Almost Ideal Demand (AID) system, EAS...

Market-Based Lobbying: Evidence from Advertising Spending in Italy

By Stefano DellaVigna, Ruben Durante, Brian Knight, and Eliana La Ferrara

American Economic Journal: Applied Economics, January 2016

We analyze a novel lobbying channel: firms shifting spending toward a politician's business in the hope of securing favorable regulation. We examine the evolution of advertising spending in Italy during 1993-2009, a period in which Berlusconi was in power...

Underestimating the Real Growth of GDP, Personal Income, and Productivity

[Symposium: Are Measures of Economic Growth Biased?]

By Martin Feldstein

Journal of Economic Perspectives, Spring 2017

Economists have long recognized that changes in the quality of existing goods and services, along with the introduction of new goods and services, can raise grave difficulties in measuring changes in the real output of the economy. But despite the attenti...

Temporary Investment Tax Incentives: Theory with Evidence from Bonus Depreciation

By Christopher L. House and Matthew D. Shapiro

American Economic Review, June 2008

The intertemporal elasticity of investment for long-lived capital goods is nearly infinite. Consequently, investment prices should fully reflect temporary tax subsidies, regardless of the investment supply elasticity. Since prices move one-for-one with...

Abducting Economics

By James J. Heckman and Burton Singer

American Economic Review, May 2017

Abduction is the process of generating and choosing models, hypotheses, and data analyzed in response to surprising findings. All good empirical economists abduct. Explanations usually evolve as studies evolve. The abductive approach challenges economists...

Economic Research Evolves: Fields and Styles

By Joshua Angrist, Pierre Azoulay, Glenn Ellison, Ryan Hill, and Susan Feng Lu

American Economic Review, May 2017

We examine the evolution of economics research using a machine-learning-based classification of publications into fields and styles. The changing field distribution of publications would not seem to favor empirical papers. But economics' empirical shift i...

On the Cyclicality of Research and Development

By Gadi Barlevy

American Economic Review, September 2007

Economists have recently argued recessions play a useful role in fostering growth. Yet a major source of growth, R&D, is procyclical. This paper argues one reason for procyclical R&D is a dynamic externality inherent in R&D that makes entrepreneurs sho...

The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States

By Edward L. Glaeser and Joshua D. Gottlieb

Journal of Economic Literature, December 2009

Empirical research on cities starts with a spatial equilibrium condition: workers and firms are assumed to be indifferent across space. This condition implies that research on cities is different from research on countries, and that work on places withi...

Genetic Diversity and the Origins of Cultural Fragmentation

By Quamrul Ashraf and Oded Galor

American Economic Review, May 2013

The origin of the uneven distribution of ethnic and cultural fragmentation across countries has been underexplored, despite the importance attributed to the effects of diversity on the stability and prosperity of nations. Building on the role of deeply-ro...

Americans Do IT Better: US Multinationals and the Productivity Miracle

By Nicholas Bloom, Raffaella Sadun, and John Van Reenen

American Economic Review, February 2012

US productivity growth accelerated after 1995 (unlike Europe's), particularly in sectors that intensively use information technologies (IT). Using two new micro panel datasets we show that US multinationals operating in Europe also experienced a "produc...

Does Money Illusion Matter?

By Ernst Fehr and Jean-Robert Tyran

American Economic Review, December 2001

This paper shows that a small amount of individual-level money illusion may cause considerable aggregate nominal inertia after a negative nominal shock. In addition, our results indicate that negative and positive nominal shocks have asymmetric effects be...