Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa

By Cally Ardington, Anne Case, and Victoria Hosegood

American Economic Journal: Applied Economics, January 2009

We quantify the labor supply responses of prime-aged adults to the presence of pensioners in their households, using longitudinal data collected in South Africa. We compare households and individuals before and after pension receipt and pension loss, w...

Editor's Note

By Esther Duflo

American Economic Journal: Applied Economics, January 2009

Educational Debt Burden and Career Choice: Evidence from a Financial Aid Experiment at NYU Law School

By Erica Field

American Economic Journal: Applied Economics, January 2009

This paper examines the influence of psychological responses to debt on career choices from an experiment in which alternative financial aid packages were assigned by lottery to a set of law school admits. The packages had equivalent monetary value, bu...

Border Effect or Country Effect? Seattle May Not Be So Far from Vancouver After All

By Yuriy Gorodnichenko and Linda L. Tesar

American Economic Journal: Macroeconomics, January 2009

This paper reexamines the evidence on the border effect. We argue that if there is cross-country heterogeneity in the distribution of within-country price differentials, there is no clear benchmark from which to gauge the effect of a border. In the abs...

Rent Preservation and the Persistence of Underdevelopment

By Raghuram G. Rajan

American Economic Journal: Macroeconomics, January 2009

When citizens in a poor constrained society are unequally endowed, they are likely to find it hard to agree on reforms, even though the status quo hurts them collectively. Each citizen group or constituency prefers reforms that expand its opportunities...

Culture: An Empirical Investigation of Beliefs, Work, and Fertility

By Raquel Fernández and Alessandra Fogli

American Economic Journal: Macroeconomics, January 2009

We study culture by examining the work and fertility behavior of second-generation American women. Culture is proxied with past female labor force participation and total fertility rates from the woman's country of ancestry. The values of these variabl...

Civic Virtue and Labor Market Institutions

By Yann Algan and Pierre Cahuc

American Economic Journal: Macroeconomics, January 2009

We argue civic virtue plays a key role in explaining the design of public insurance against unemployment risks by solving moral hazard issues which hinder the efficiency of unemployment insurance. We show, in a simple model, that economies with stronge...

The Ins and Outs of Cyclical Unemployment

By Michael W. L. Elsby, Ryan Michaels, and Gary Solon

American Economic Journal: Macroeconomics, January 2009

A dominant trend in recent modeling of labor market fluctuations is to treat unemployment inflows as acyclical. This trend has been encouraged by recent influential papers that stress the role of longer unemployment spells, rather than more unemploymen...

A Black Swan in the Money Market

By John B. Taylor and John C. Williams

American Economic Journal: Macroeconomics, January 2009

The recent financial crisis saw a dramatic and persistent jump in interest rate spreads between overnight federal funds and longer - term interbank loans. The Fed took several actions to reduce these spreads including the creation of the Term Auction F...

On the Sources of the Great Moderation

By Jordi Galí and Luca Gambetti

American Economic Journal: Macroeconomics, January 2009

The Great Moderation in the US economy has been accompanied by large changes in the comovements among output, hours, and labor productivity. Those changes are reflected in both conditional and unconditional second moments as well as in the impulse resp...

Trade and the Diffusion of the Industrial Revolution

By Robert E. Lucas

American Economic Journal: Macroeconomics, January 2009

This paper proposes a model to describe the evolution of real gross domestic product (GDP) in the world economy that is intended to apply to all open economies. The parameters of the model are calibrated using evidence from Sachs and Warner on economie...

Editor's Note

By Olivier Blanchard

American Economic Journal: Macroeconomics, January 2009

New Keynesian Models: Not Yet Useful for Policy Analysis

By V. V. Chari, Patrick J. Kehoe, and Ellen R. McGrattan

American Economic Journal: Macroeconomics, January 2009

Macroeconomists have largely converged on method, model design, reduced-form shocks, and principles of policy advice. Our main disagreements today are about implementing the methodology. Some think New Keynesian models are ready to be used for quarter-...

Convergence in Macroeconomics: Elements of the New Synthesis

By Michael Woodford

American Economic Journal: Macroeconomics, January 2009

While macroeconomics is often thought of as a deeply divided field, with less of a shared core and correspondingly less cumulative progress than other areas of economics, in fact, there are fewer fundamental disagreements among macroeconomists now than...

Convergence in Macroeconomics: The Labor Wedge

By Robert Shimer

American Economic Journal: Macroeconomics, January 2009

I review research on the behavior of the labor wedge, the ratio between the marginal rate of substitution of consumption for leisure and the marginal product of labor. According to competitive, market-clearing macroeconomic models, the ratio is easy to...

Front Matter

American Economic Journal: Macroeconomics, January 2009

Front Matter

American Economic Journal: Applied Economics, January 2009

The Economics of Structured Finance

[Symposium: Early Stages of the Credit Crunch]

By Joshua Coval, Jakub Jurek, and Erik Stafford

Journal of Economic Perspectives, Winter 2009

This paper investigates the spectacular rise and fall of structured finance. The essence of structured finance activities is the pooling of economic assets like loans, bonds, and mortgages, and the subsequent issuance of a prioritized capital structure of...

The Rise in Mortgage Defaults

[Symposium: Early Stages of the Credit Crunch]

By Christopher Mayer, Karen Pence, and Shane M. Sherlund

Journal of Economic Perspectives, Winter 2009

The first hints of trouble in the mortgage market surfaced in mid-2005, and conditions subsequently began to deteriorate rapidly. Mortgage defaults and delinquencies are particularly concentrated among borrowers whose mortgages are classified as "subprime...

Crisis and Responses: The Federal Reserve in the Early Stages of the Financial Crisis

[Symposium: Early Stages of the Credit Crunch]

By Stephen G. Cecchetti

Journal of Economic Perspectives, Winter 2009

Realizing that their traditional instruments were inadequate for responding to the crisis that began on August 9, 2007, Federal Reserve officials improvised. Beginning in mid-December 2007, they implemented a series of changes directed at ensuring that li...