Shocks and Exchange Rates in Small Open Economies

By Vito Cormun and Pierre De Leo

American Economic Journal: Macroeconomics, April 2026

We separately identify domestic and external sources of exchange rate fluctuations in a large sample of small open economies (SOEs). We find that external shocks lead to large and predictable deviations from uncovered interest parity (UIP), while domestic...

Disagreement about Monetary Policy

By Karthik A. Sastry

American Economic Journal: Macroeconomics, April 2026

This paper studies why central banks and markets hold different beliefs. I introduce a model that formalizes three mechanisms for disagreement: asymmetric information about fundamentals, different perceptions of the policy rule, and different confidence i...

Time for Growth

By Lars Boerner and Battista Severgnini

American Economic Journal: Macroeconomics, April 2026

This paper investigates the adoption, diffusion, and long-run impact of the public mechanical clock, one of the most important high-technology machines in history, on European economic growth and development. We avoid endogeneity by considering the relati...

Production and Financial Networks in Interplay

By Kenan Huremović, Gabriel Jiménez, Enrique Moral-Benito, José-Luis Peydró, and Fernando Vega-Redondo

American Economic Review

We show that bank credit shocks to firms propagate along the production network, with stronger upstream than downstream effects. Our identification relies on: (i) administrative datasets from Spain covering supplier-customer transactions and bank loans...

Random Utility with Unobservable Alternatives

By Haruki Kono, Kota Saito, and Alec Sandroni

American Economic Review

The random utility model (RUM), a cornerstone in economics, is typically studied under the assumption that choice frequencies of all alternatives are observable. In practice, however, some alternatives have unobservable choice frequencies and are commo...

Uncertainty and Change: Survey Evidence of Firms’ Subjective Beliefs

By Rüdiger Bachmann, Kai Carstensen, Stefan Lautenbacher, Manuel Menkhoff, and Martin Schneider

American Economic Review

This paper studies how managers plan under uncertainty. In a new panel survey of German manufacturing firms, we observe both forecasts of sales growth and a quantitative measure of subjective uncertainty. We show that subjective uncertainty reflects c...

Cool Cities: The Value of Urban Trees

By Lu Han, Stephan Heblich, Christopher Timmins, and Yanos Zylberberg

American Economic Review: Insights

As urban populations grow, more people face extreme heat, increasing demand for natural cooling. Urban trees offer various amenities, including cooling benefits, yet their economic value is hard to quantify. This paper estimates the implicit value of u...

How Does Globalization Affect the Synchronization of Business Cycles?

By M. Ayhan Kose, Eswar S. Prasad, and Marco E. Terrones

American Economic Review, May 2003

Deep Learning for Solving Economic Models

By Jesús Fernández-Villaverde

Journal of Economic Literature

The ongoing revolution in deep learning is reshaping research across many fields, including economics. Its effects are especially clear in solving dynamic economic models. These models often lack closed-form solutions, so economists have long relied on nu...

The Political Consequences of Mass Repatriation

By Edoardo Cefalà

American Economic Journal: Economic Policy

What happens when a country’s electorate suddenly expands by hundreds of thousands of new voters? This study examines the political impact of the mass arrival of repatriates from Algeria to France. Using this quasi-experiment, I demonstrate that their...

Procyclical Fiscal Policy and Asset Market Incompleteness

By Andrés Fernández, Daniel Guzman, Ruy Lama, and Carlos Vegh

American Economic Journal: Macroeconomics

We develop a model of the joint behavior of optimal tax rates and government spending to explain the procyclicality of fiscal policy in emerging/developing countries. We rely on financial frictions captured by asset market incompleteness and debt-elastic ...

Measuring Sensitive Outcomes through Ballot-Bag Surveys

By Bruno Crépon, Ahmed Elsayed, and Jules Gazeaud

American Economic Review: Insights

Prevailing methods for measuring sensitive outcomes confront researchers with an inherent bias-variance trade-off: direct questioning is prone to a sensitivity bias, while indirect methods such as list experiments are substantially less precise. We test...

Rules versus Discretion without Common Knowledge

By Zhen Huo and Fei Zhou

American Economic Review: Insights

King Dollar: The Past and Future of the World's Dominant Currency by Paul Blustein

By Ethan Ilzetzki

Journal of Economic Literature

Spatial Spillovers of Conflict in Somalia

By Marco Alfano and Thomas Cornelissen

American Economic Review

Conflict along transportation routes during Somalia’s al-Shabaab insurgency significantly increases maize prices at distant locations, decreasing food security, health, and education. Estimated conflict risk has strong price effects independently of r...

The Productivity of Professions: Evidence from the Emergency Department

By David Chan and Yiqun Chen

American Economic Review

This paper studies the productivity of nurse practitioners (NPs) and physicians, two professions performing overlapping tasks but with starkly different backgrounds, training, and pay. Using quasi-experimental variation in patient assignment to NPs versus...

Contextually Private Mechanisms

By Andreas Haupt and Zoë Hitzig

American Economic Review

A designer employs a dynamic protocol to elicit private information. Protocols produce a set of contextual privacy violations— information learned that may be superfluous given the context. A protocol is maximally contextually private if there is no ...

Resource Misallocation in European Firms: The Role of Constraints, Firm Characteristics and Managerial Decisions

By Yuriy Gorodnichenko, Debora Revoltella, Jan Svejnar, and Christoph T. Weiss

American Economic Journal: Macroeconomics

Using a new survey, we document high dispersion of marginal revenue products across firms in the European Union (EU). To interpret this dispersion, we develop a highly portable framework to quantify gains from better allocation of resources. We demonstrat...

Why Has the U.S. Economy Become Less Correlated with the Rest of the World?

By Jonathan Heathcote and Fabrizio Perri

American Economic Review, May 2003

In this paper we do two things. First we document that over the last 40 years the U.S. business cycle has become less synchronized with the cycle in the rest of the world. Second we try to explain why this has happened. We use a general-equilibrium model ...

Bayesian Fairness: Reward Rule and Disappointment under Information Asymmetry

By Roland Pongou and Ghislain Junior Sidie

American Economic Journal: Microeconomics

We provide an axiomatic foundation for the classical problem of compensating workers when effort is unobserved. The employer holds Bayesian beliefs about workers’ effort, observes output precisely or imprecisely, and seeks fairness. We introduce axio...