International Recessions

By Fabrizio Perri and Vincenzo Quadrini

American Economic Review, April 2018

Macro developments leading up to the 2008 crisis displayed an unprecedented degree of international synchronization. Before the crisis, all G7 countries experienced credit growth and, around the time of the Lehman bankruptcy, they all faced sharp and larg...

The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden

By Jonas Kolsrud, Camille Landais, Peter Nilsson, and Johannes Spinnewijn

American Economic Review, April 2018

This paper provides a simple, yet robust framework to evaluate the time profile of benefits paid during an unemployment spell. We derive sufficient-statistics formulae capturing the marginal insurance value and incentive costs of unemployment benefits p...

Team-Specific Capital and Innovation

By Xavier Jaravel, Neviana Petkova, and Alex Bell

American Economic Review, April 2018

We establish the importance of team-specific capital in the typical inventor's career. Using administrative tax and patent data for the population of US patent inventors from 1996 to 2012, we find that an inventor's premature death causes a large and long...

The Economic Effects of the Abolition of Serfdom: Evidence from the Russian Empire

By Andrei Markevich and Ekaterina Zhuravskaya

American Economic Review, April 2018

We document substantial increases in agricultural productivity, industrial output, and peasants' nutrition in Imperial Russia as a result of the abolition of serfdom in 1861. Before the emancipation, provinces where serfs constituted the majority of agric...

Resurrecting the Role of the Product Market Wedge in Recessions

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

American Economic Review, April 2018

Employment and hours are more cyclical than dictated by productivity and consumption. This intratemporal labor wedge can arise from product or labor market distortions. Based on employee wages, the literature has attributed the intratemporal wedge almost ...

Corporate Finance and Monetary Policy

By Guillaume Rocheteau, Randall Wright, and Cathy Zhang

American Economic Review, April 2018

We develop a general equilibrium model where entrepreneurs finance random investment opportunities using trade credit, bank-issued assets, or currency. They search for bank funding in over-the-counter markets where loan sizes, interest rates, and down pay...

The Limits to Partial Banking Unions: A Political Economy Approach

By Dana Foarta

American Economic Review, April 2018

This paper studies the welfare effects of a "partial banking union" in which cross-country transfers for bailouts are set at the supranational level, but policymakers in member countries decide the distribution of funds. This allows the self-interested po...

Family Ruptures, Stress, and the Mental Health of the Next Generation

By Petra Persson and Maya Rossin-Slater

American Economic Review, April 2018

This paper studies how in utero exposure to maternal stress from family ruptures affects later mental health. We find that prenatal exposure to the death of a maternal relative increases take-up of ADHD medications during childhood and anti-anxiety and de...

Family Ruptures, Stress, and the Mental Health of the Next Generation: Comment

By Brett Matsumoto

American Economic Review, April 2018

The empirical methodology used by Persson and Rossin-Slater (2018) to estimate the causal effect of in utero exposure to stress contains a potentially significant flaw. They define the control group in a way that may bias their causal estimates and can le...

Family Ruptures, Stress, and the Mental Health of the Next Generation: Reply

By Petra Persson and Maya Rossin-Slater

American Economic Review, April 2018

Persson and Rossin-Slater (2018) find that prenatal exposure to family ruptures affects childhood and adult mental health, as well as infant physical health. We compare children whose relatives die within 280 days post-conception to children whose relativ...

Front Matter

American Economic Journal: Economic Policy, May 2018

Selection and Market Reallocation: Productivity Gains from Multinational Production

By Laura Alfaro and Maggie X. Chen

American Economic Journal: Economic Policy, May 2018

Assessing productivity gains from multinational production has been a vital topic of economic research and policy debate. Positive productivity gains are often attributed to productivity spillovers; however, an alternative, much less emphasized channel ...

Fiscal Centralization: Theory and Evidence from the Great Depression

By Daniele Coen-Pirani and Michael Wooley

American Economic Journal: Economic Policy, May 2018

The Great Depression produced a profound and lasting influence on the structure of US government. This paper studies theoretically and empirically the increased centralization of revenues and expenditures by the states relative to local governments during...

How Do Changes in Housing Voucher Design Affect Rent and Neighborhood Quality?

By Robert Collinson and Peter Ganong

American Economic Journal: Economic Policy, May 2018

US housing voucher holders pay their landlord a fraction of household income and the government pays the rest, up to a rent ceiling. We study how two types of changes to the rent ceiling affect landlords and tenants. A policy that makes vouchers more gene...

The Fall of Coal: Joint Impacts of Fuel Prices and Renewables on Generation and Emissions

By Harrison Fell and Daniel T. Kaffine

American Economic Journal: Economic Policy, May 2018

Since 2007, US coal-fired electricity generation has declined by a stunning 25 percent. Detailed daily unit-level data is used to examine the joint impact of natural gas prices and wind generation on coal-fired generation and emissions, with a focus on th...

Immigration, Employment Opportunities, and Criminal Behavior

By Matthew Freedman, Emily Owens, and Sarah Bohn

American Economic Journal: Economic Policy, May 2018

We take advantage of provisions of the Immigration Reform and Control Act of 1986 (IRCA), which granted legal resident status to long-time unauthorized residents but created new obstacles to employment for more recent immigrants, to explore how employment...

A Macroeconomic Approach to Optimal Unemployment Insurance: Theory

By Camille Landais, Pascal Michaillat, and Emmanuel Saez

American Economic Journal: Economic Policy, May 2018

This paper develops a theory of optimal unemployment insurance (UI) in matching models. The optimal UI replacement rate is the conventional Baily-Chetty replacement rate, which solves the tradeoff between insurance and job-search incentives, plus a correc...

A Macroeconomic Approach to Optimal Unemployment Insurance: Applications

By Camille Landais, Pascal Michaillat, and Emmanuel Saez

American Economic Journal: Economic Policy, May 2018

In the United States, unemployment insurance (UI) is more generous when unemployment is high. This paper examines whether this policy is desirable. The optimal UI replacement rate is the Baily-Chetty replacement rate plus a correction term measuring the e...

Changing How Literacy Is Taught: Evidence on Synthetic Phonics

By Stephen Machin, Sandra McNally, and Martina Viarengo

American Economic Journal: Economic Policy, May 2018

A significant number of people have very low levels of literacy in many OECD countries. This paper studies a national change in policy and practice in England that refocused the teaching of reading around "synthetic phonics." This was a low-cost intervent...

Cash-on-Hand and College Enrollment: Evidence from Population Tax Data and the Earned Income Tax Credit

By Day Manoli and Nicholas Turner

American Economic Journal: Economic Policy, May 2018

We estimate causal effects of cash-on-hand on college enrollment decisions of students from low-income families. Using population-level, administrative data from US income tax returns, we exploit variation in tax refunds received in the spring of the high...