A Preferred-Habitat Model of Term Premia, Exchange Rates, and Monetary Policy Spillovers

By Pierre-Olivier Gourinchas, Walker Ray, and Dimitri Vayanos

American Economic Review, November 2025

We develop a two-country model in which currency and bond markets are populated by different investor clienteles, and segmentation is partly overcome by arbitrageurs with limited capital. Risk premia in our model are time-varying, connected across markets...

Stages of Diversification

By Jean Imbs and Romain Wacziarg

American Economic Review, March 2003

This paper studies the evolution of sectoral concentration in relation to the level of per capita income. We show that various measures of sectoral concentration follow a U-shaped pattern across a wide variety of data sources: countries first diversify, i...

Quid Pro Quo, Knowledge Spillovers, and Industrial Quality Upgrading: Evidence from the Chinese Auto Industry

By Jie Bai, Panle Jia Barwick, Shengmao Cao, and Shanjun Li

American Economic Review, November 2025

This paper studies the impact of quid pro quo (technology for market access) in facilitating knowledge spillovers and quality upgrading in the Chinese automobile industry. The identification strategy exploits within-product quality variation across a rich...

Nonlinear Pricing and Misallocation

By Gideon Bornstein and Alessandra Peter

American Economic Review, November 2025

This paper studies the effect of nonlinear pricing on markups and misallocation. In a general equilibrium model in which firms are allowed to set a quantity-dependent pricing schedule, markup heterogeneity is not a sign of misallocation. Instead, we point...

Borrowing and Spending in the Money: Debt Substitution and the Cash-Out Refinance Channel of Monetary Policy

By Elliot Anenberg, Tess Scharlemann, and Eileen van Straelen

American Economic Review, November 2025

We show that the strong negative effect of higher mortgage rates on cash-out refinancing reflects substitution into other borrowing products, not large changes in total new household borrowing. We exploit plausibly exogenous changes in interest rates due ...

Anatomy of the Phillips Curve: Micro Evidence and Macro Implications

By Luca Gagliardone, Mark Gertler, Simone Lenzu, and Joris Tielens

American Economic Review, November 2025

We develop a bottom-up approach to estimate the slope of the primitive form of the New Keynesian Phillips curve, which features marginal cost as the real activity variable. Using quarterly micro data on prices, costs, and output, we estimate dynamic pass-...

The Trade-Off between Flexibility and Robustness in Instrumental Variables Analysis

By Ben Deaner

American Economic Review, November 2025

In additive instrumental variables models, the robustness to some failure of instrumental validity or additive separability depends on the strength of a priori restrictions on the structural relationship between outcomes and treatments. I provide theoreti...

Distinguishing Causes of Neighborhood Racial Change: A Nearest-Neighbor Design

By Patrick Bayer, Marcus Casey, W. Ben McCartney, John Orellana-Li, and Calvin Zhang

American Economic Review, November 2025

We study neighborhood choice using a novel research design that contrasts the move rate of homeowners who receive a new different-race neighbor immediately next-door versus slightly farther away on the same block. This approach isolates a component of pre...

Managers and Public Hospital Performance

By Pablo Muñoz and Cristóbal Otero

American Economic Review, November 2025

We study whether the quality of managers can affect public service provision in the context of public health. Using novel data from public hospitals in Chile, we show how the introduction of a competitive recruitment system and better pay for public hospi...

Increasing Degree Attainment among Low-Income Students: The Role of Intensive Advising and College Quality

By Andrew Barr and Benjamin Castleman

American Economic Review, November 2025

A college degree offers a pathway to economic mobility for low-income students. Using a multisite randomized controlled trial combined with administrative and survey data, we demonstrate that intensive advising during high school and college significantly...

Refugees’ Economic Integration

By Dany Bahar, Rebecca Brough, and Giovanni Peri

Journal of Economic Literature

Refugees are international migrants escaping persecution and crises, whose economic success in their countries of destination is threatened by lack of access to labor and credit markets, limited information on employment opportunities, and loss of human c...

The Survival of the Welfare State

By John Hassler, José V. Rodríguez Mora, Kjetil Storesletten, and Fabrizio Zilibotti

American Economic Review, March 2003

This paper provides an analytical characterization of Markov perfect equilibria in a model with repeated voting, where agents vote over distortionary income redistribution. A key result is that the future constituency for redistributive policies depends p...

The Licensing Racket: How We Decide Who Is Allowed to Work, and Why It Goes Wrong by Rebecca Haw Allensworth

By Gabriel Scheffler

Journal of Economic Literature

Front Matter

Journal of Economic Perspectives, Fall 2025

Japan's Debt Puzzle: Sovereign Wealth Fund from Borrowed Money

[Symposium: Government Debt]

By Yili Chien, Wenxin Du, and Hanno Lustig

Journal of Economic Perspectives, Fall 2025

We analyze the risks associated with Japan's prolonged low-interest rate policies amid a global environment of rising rates. To finance its persistent deficits, the Japanese public sector depends on inexpensive domestic funding to invest in risky assets b...

Putting US Fiscal Policy on a Sustainable Path

[Symposium: Government Debt]

By Karen Dynan and Douglas Elmendorf

Journal of Economic Perspectives, Fall 2025

Even allowing for uncertainty about the future economy, current US fiscal policies are almost certainly unsustainable. Therefore, policymakers must decide when and in what ways to raise taxes and reduce spending to put debt on a lower trajectory. Acting s...

Sovereign Debt and Fiscal Integration in the European Union

[Symposium: Government Debt]

By Zsolt Darvas, Lennard Welslau, and Jeromin Zettelmeyer

Journal of Economic Perspectives, Fall 2025

This paper examines sovereign debt risks in the European Union, which has centralized monetary policy within the euro area, while fiscal policies remain national. Institutional reforms, including common banking supervision, the European Stability Mechanis...

China's Lending to Developing Countries: From Boom to Bust

[Symposium: Government Debt]

By Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch

Journal of Economic Perspectives, Fall 2025

This paper provides a comprehensive overview of China's lending to developing countries—a central feature of today's international financial system. Building on our previous research and the work of others, we document the scale, destination, and terms ...

Industrial Policy, Asian Miracle Style

[Symposium: The East Asian Tigers]

By Reda Cherif and Fuad Hasanov

Journal of Economic Perspectives, Fall 2025

We decipher the riddle of the meteoric rise of the Asian Miracles—Korea, Taiwan, Singapore and Hong Kong, and Japan before them—in the second half of the twentieth century. We argue that the secret of their success lies in the specific type of industr...

The World Bank's East Asian Miracle: Too Much a Product of Its Time?

[Symposium: The East Asian Tigers]

By Nancy Birdsall

Journal of Economic Perspectives, Fall 2025

The 1993 publication of a World Bank book on the East Asian Miracle explained the extraordinarily rapid growth of Japan and seven other economies of East Asia (at 5 percent a year) between 1965 and 1990 as grounded in those economies' adherence to market ...