Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate

[Symposium: U.S. Trade Deficit]

By Martin Feldstein

Journal of Economic Perspectives, Summer 2008

The massive deficit in the U.S. trade and current accounts is one of the most striking features of the current global economy and, to some observers, one of the most worrying. Although the current account deficit finally began to shrink in 2007, it remain...

Estimating Marginal Returns to Education

By Pedro Carneiro, James J. Heckman, and Edward J. Vytlacil

American Economic Review, October 2011

This paper estimates marginal returns to college for individuals induced to enroll in college by different marginal policy changes. The recent instrumental variables literature seeks to estimate this parameter, but in general it does so only under strong ...

Human Capital and the Wealth of Nations

By Rodolfo E. Manuelli and Ananth Seshadri

American Economic Review, September 2014

We reevaluate the role of human capital in determining the wealth of nations. We use standard human capital theory to estimate stocks of human capital and allow the quality of human capital to vary across countries. Our model can explain differences in sc...

Competition and Truth in the Market for News

[Symposium: Economics of Persuasion]

By Matthew Gentzkow and Jesse M. Shapiro

Journal of Economic Perspectives, Spring 2008

In this essay, we evaluate the case for competition in news markets from the perspective of economics. First, we consider the simple proposition that when more points of view are heard and defended, beliefs will converge to the truth. This concept of "com...

Analyzing the Airwaves Auction

By R. Preston McAfee and John McMillan

Journal of Economic Perspectives, Winter 1996

The design of the Federal Communications Commission spectrum license auction is a case study in the application of economic theory. Auction theory helped address policy questions such as whether an open auction or a sealed-bid auction should be used; whet...

Prediction Markets

[Symposium: Event Markets]

By Justin Wolfers and Eric Zitzewitz

Journal of Economic Perspectives, Spring 2004

We analyze the extent to which simple markets can be used to aggregate disperse information into efficient forecasts of uncertain future events. Drawing together data from a range of prediction contexts, we show that market-generated forecasts are typical...

In the Wrong Hands: Complementarities, Resource Allocation, and TFP

By Simeon D. Alder

American Economic Journal: Macroeconomics, January 2016

I explore mismatch between firms and their managers as a source of variation in aggregate output and total factor productivity (TFP). The model is calibrated to match observations on the size distribution of US manufacturing firms, managerial compensation...

The Impact of Disability Benefits on Labor Supply: Evidence from the VA's Disability Compensation Program

By David H. Autor, Mark Duggan, Kyle Greenberg, and David S. Lyle

American Economic Journal: Applied Economics, July 2016

Combining administrative data from the US Army, Department of Veterans Affairs, and Social Security Administration, we analyze the effect of the VA's Disability Compensation (DC) program on veterans' labor force participation and earnings. We study the 20...

Employment Fluctuations with Equilibrium Wage Stickiness

By Robert E. Hall

American Economic Review, March 2005

Following a recession, the aggregate labor market is slack–employment remains below normal and recruiting efforts of employers, as measured by help-wanted advertising and vacancies, are low. A model of matching friction explains the qualitative response...

Forecasting Volatility in Financial Markets: A Review

By Ser-Huang Poon and Clive W.J. Granger

Journal of Economic Literature, June 2003

Financial market volatility is an important input for investment, option pricing, and financial market regulation. The emphasis of this review article is on forecasting instead of modelling; it compares the volatility forecasting findings in 93 papers pub...

Anchoring Effects: Evidence from Art Auctions

By Alan Beggs and Kathryn Graddy

American Economic Review, June 2009

This paper shows that the price of a painting sold at an art auction and the experts' pre-sale valuations are anchored on the price at which the painting previously sold at auction. We are able to separate anchoring from rational learning by using the id...

Estimating Dynamic Games of Electoral Competition to Evaluate Term Limits in US Gubernatorial Elections

By Holger Sieg and Chamna Yoon

American Economic Review, July 2017

This paper shows how to identify and estimate, using standard semi-parametric techniques, a class of dynamic games with perfect monitoring, that have been at the frontier of recent research in political economy. The empirical analysis provides novel quant...

The Politics of Compromise

By Alessandro Bonatti and Heikki Rantakari

American Economic Review, February 2016

An organization must select among competing projects that differ in their payoff consequences for its members. Each agent chooses a project and exerts effort affecting its completion time. When one or more projects are complete, the agents select which on...

A Structural Perspective on the Experimentalist School

[Symposium: Con out of Economics]

By Michael P. Keane

Journal of Economic Perspectives, Spring 2010

What has always bothered me about the "experimentalist" school is the false sense of certainty it conveys. My view, like Leamer's, is that there is no way to escape the role of assumptions in statistical work, so our conclusions will always be contingent....

Chipping Away at the Glass Ceiling: Gender Spillovers in Corporate Leadership

By David A. Matsa and Amalia R. Miller

American Economic Review, May 2011

This paper examines the role of women helping women in corporate America. Using a merged panel of directors and executives for large US corporations between 1997 and 2009, we find a positive association between the female share of the board of directors i...

Refugees, Asylum Seekers, and Policy in OECD Countries

By Timothy J. Hatton

American Economic Review, May 2016

Refugees and asylum seekers are only a small proportion of the 60 million forcibly displaced persons. But those seeking asylum in the developed world have received much of the attention as western governments have struggled to develop a policy response. A...

Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s

[Symposium: Changes in Corporate Structure]

By Bengt Holmstrom and Steven N. Kaplan

Journal of Economic Perspectives, Spring 2001

This paper describes and considers explanations for changes in corporate governance and merger activity in the United States since 1980. Corporate governance in the 1980s was dominated by intense merger activity distinguished by the prevalence of leverage...

State "Currencies" and the Transition to the U.S. Dollar: Clarifying Some Confusions

By Ronald W. Michener and Robert E. Wright

American Economic Review, June 2005

Farley W. Grubb's recent papers on the early U.S. monetary system would be important contributions to the common currency area literature were not most of their historical assertions questionable and their key assumption—that the medium of exchange can ...

Using Taxes to Reduce Carbon Dioxide Emissions Rates of New Passenger Vehicles: Evidence from France, Germany, and Sweden

By Thomas Klier and Joshua Linn

American Economic Journal: Economic Policy, February 2015

France, Germany, and Sweden link taxes to passenger vehicles' carbon dioxide (CO2) emissions rates. Based on new vehicle registration data from 2005 to 2010, we find that CO2 taxes reduce registrations. The effect is larger in France than in either German...

Contractual and Organizational Structure with Reciprocal Agents

By Florian Englmaier and Stephen Leider

American Economic Journal: Microeconomics, May 2012

We solve for the optimal contract when agents are reciprocal, demonstrating that generous compensation can substitute for performance-based pay. Our results suggest several factors that make firms more likely to use reciprocal incentives. Reciprocity is ...