Sustainable Shadow Banking

By Guillermo Ordoñez

American Economic Journal: Macroeconomics, January 2018

Banking regulation is beneficial because it constrains banks' portfolios to prevent excessive risk taking. But given that regulators usually know less than a bank about its investment opportunities, regulation comes at the cost of foregoing profitable inv...

Job Polarization and Structural Change

By Zsófia L. Bárány and Christian Siegel

American Economic Journal: Macroeconomics, January 2018

We document that job polarization—contrary to the consensus—has started as early as the 1950s in the United States: middle-wage workers have been losing both in terms of employment and average wage growth compared to low- and high-wage workers...

Climate Policy and Innovation: A Quantitative Macroeconomic Analysis

By Stephie Fried

American Economic Journal: Macroeconomics, January 2018

A carbon tax can induce innovation in green technologies. I evaluate the quantitative impact of this channel in a dynamic, general equilibrium model with endogenous innovation in fossil, green, and nonenergy inputs. I discipline the parameters using evide...

The Relative Importance of Aggregate and Sectoral Shocks and the Changing Nature of Economic Fluctuations

By Julio Garin, Michael J. Pries, and Eric R. Sims

American Economic Journal: Macroeconomics, January 2018

A principal components decomposition of sectoral IP data reveals that the contribution of aggregate shocks to the variance of aggregate output declined from about 70 percent in the period 1967–1983 to about 30 percent after 1983. We develop an "isla...

Firms and the Decline in Earnings Inequality in Brazil

By Jorge Alvarez, Felipe Benguria, Niklas Engbom, and Christian Moser

American Economic Journal: Macroeconomics, January 2018

We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed-effects models to understand the sources of this decrease. Firm effects ...

Job Search Behavior over the Business Cycle

By Toshihiko Mukoyama, Christina Patterson, and Ayşegül Şahin

American Economic Journal: Macroeconomics, January 2018

We create a novel measure of job search effort exploiting the American Time Use and Current Population Surveys. We examine the cyclicality of search effort using time-series, cross-state, and individual variation and find that it is countercyclical. We th...

The Possibility of Ideological Bias in Structural Macroeconomic Models

By Gilles Saint-Paul

American Economic Journal: Macroeconomics, January 2018

An ideologically biased expert faces trade-offs in model design. The perceived model must be autocoherent—its use by all agents delivers a self-confirming equilibrium. Policy may be influenced by manipulating the Keynesian multiplier or the Phillips...

Front Matter

American Economic Review, February 2018

The Effects of Pretrial Detention on Conviction, Future Crime, and Employment: Evidence from Randomly Assigned Judges

By Will Dobbie, Jacob Goldin, and Crystal S. Yang

American Economic Review, February 2018

Over 20 percent of prison and jail inmates in the United States are currently awaiting trial, but little is known about the impact of pretrial detention on defendants. This paper uses the detention tendencies of quasi-randomly assigned bail judges to esti...

Implications of US Tax Policy for House Prices, Rents, and Homeownership

By Kamila Sommer and Paul Sullivan

American Economic Review, February 2018

This paper studies the impact of the mortgage interest tax deduction on equilibrium house prices, rents, homeownership, and welfare. We build a dynamic model of the housing market that features a realistic progressive tax system in which owner-occupied ho...

The Welfare Cost of Perceived Policy Uncertainty: Evidence from Social Security

By Erzo F. P. Luttmer and Andrew A. Samwick

American Economic Review, February 2018

Policy uncertainty reduces individual welfare when individuals have limited opportunities to mitigate or insure against the resulting consumption fluctuations. We field an original survey to measure the degree of perceived policy uncertainty in Social Sec...

The Economic Consequences of Hospital Admissions

By Carlos Dobkin, Amy Finkelstein, Raymond Kluender, and Matthew J. Notowidigdo

American Economic Review, February 2018

We use an event study approach to examine the economic consequences of hospital admissions for adults in two datasets: survey data from the Health and Retirement Study, and hospitalization data linked to credit reports. For non-elderly adults with health ...

Export Destinations and Input Prices

By Paulo Bastos, Joana Silva, and Eric Verhoogen

American Economic Review, February 2018

This paper examines the relationship between the destination of exports and the input prices paid by firms, using detailed customs and firm-product-level data from Portugal. Both ordinary least squares regressions and an instrumental-variable strategy usi...

Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany

By Clemens Fuest, Andreas Peichl, and Sebastian Siegloch

American Economic Review, February 2018

This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities exploiting 6,800 tax changes for identification. Using event study designs and difference-in-differences models, we find that workers bear about ...

Lying Aversion and the Size of the Lie

By Uri Gneezy, Agne Kajackaite, and Joel Sobel

American Economic Review, February 2018

This paper studies lying. An agent randomly picks a number from a known distribution. She can then report any number and receive a monetary payoff based only on her report. The paper presents a model of lying costs that generates hypotheses regarding beha...

Option-Based Credit Spreads

By Christopher L. Culp, Yoshio Nozawa, and Pietro Veronesi

American Economic Review, February 2018

We present a novel empirical benchmark for analyzing credit risk using "pseudo firms" that purchase traded assets financed with equity and zero-coupon bonds. By no-arbitrage, pseudo bonds are equivalent to Treasuries minus put options on pseudo firm asset...

Certified Random: A New Order for Coauthorship

By Debraj Ray ⓡ Arthur Robson

American Economic Review, February 2018

Alphabetical name order is the norm for joint publications in economics. However, alphabetical order confers greater benefits on the first author. In a two-author model, we introduce and study certified random order: the uniform randomization of names mad...

Intergenerational Mobility and Preferences for Redistribution

By Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso

American Economic Review, February 2018

Using new cross-country survey and experimental data, we investigate how beliefs about intergenerational mobility affect preferences for redistribution in France, Italy, Sweden, the United Kingdom, and the United States. Americans are more optimistic than...

An Efficient Ascending-Bid Auction for Multiple Objects: Comment

By Noriaki Okamoto

American Economic Review, February 2018

Ausubel (2004) introduces a new ascending-bid auction rule for multiple homogeneous objects, called the Ausubel auction, which is a dynamic counterpart of the Vickrey auction. He claims that in the Ausubel auction with private values, sincere bidding by a...

An Efficient Ascending-Bid Auction for Multiple Objects: Reply

By Lawrence M. Ausubel

American Economic Review, February 2018

In a comment, Okamoto (2018) identifies and corrects a misspecification of the rationing rule in Ausubel (2004). This reply elaborates on the observation that the optimality of truthful bidding in dynamic auctions may be sensitive to the fine details of t...