Multiple-Product Firms and Product Switching

By Andrew B. Bernard, Stephen J. Redding, and Peter K. Schott

American Economic Review, March 2010

This paper examines the frequency, pervasiveness, and determinants of product switching by US manufacturing firms. We find that one-half of firms alter their mix of five-digit SIC products every five years, that product switching is correlated with bot...

"Momma's Got the Pill": How Anthony Comstock and Griswold v. Connecticut Shaped US Childbearing

By Martha J. Bailey

American Economic Review, March 2010

The 1960s ushered in a new era in US demographic history characterized by significantly lower fertility rates and smaller family sizes. What catalyzed these changes remains a matter of considerable debate. This paper exploits idiosyncratic variation in...

Matching and Sorting in Online Dating

By Gunter J. Hitsch, Ali Hortaçsu, and Dan Ariely

American Economic Review, March 2010

Using data on user attributes and interactions from an online dating site, we estimate mate preferences, and use the Gale-Shapley algorithm to predict stable matches. The predicted matches are similar to the actual matches achieved by the dating site, ...

Entry, Exit, and Investment-Specific Technical Change

By Roberto M. Samaniego

American Economic Review, March 2010

Using European data, this paper finds that (i) industry entry and exit rates are positively related to industry rates of investment-specific technical change (ISTC); and (ii) the sensitivity of industry entry and exit rates to cross-country differences...

Patient Cost-Sharing and Hospitalization Offsets in the Elderly

By Amitabh Chandra, Jonathan Gruber, and Robin McKnight

American Economic Review, March 2010

In the Medicare program, increases in cost sharing by a supplemental insurer can exert financial externalities. We study a policy change that raised patient cost sharing for the supplemental insurer for retired public employees in California. We find t...

Contractibility and the Design of Research Agreements

By Josh Lerner and Ulrike Malmendier

American Economic Review, March 2010

We analyze how contractibility affects contract design. A major concern when designing research agreements is that researchers use their funding to subsidize other projects. We show that, when research activities are not contractible, an option contrac...

Multinationals and Anti-sweatshop Activism

By Ann Harrison and Jason Scorse

American Economic Review, March 2010

During the 1990s, anti-sweatshop activists campaigned to improve conditions for workers in developing countries. This paper analyzes the impact of anti-sweatshop campaigns in Indonesia on wages and employment. Identification is based on comparing the w...

Robustly Optimal Monetary Policy with Near-Rational Expectations

By Michael Woodford

American Economic Review, March 2010

The paper considers optimal monetary stabilization policy in a forward-looking model, when the central bank recognizes that private sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possib...

Currency Choice and Exchange Rate Pass-Through

By Gita Gopinath, Oleg Itskhoki, and Roberto Rigobon

American Economic Review, March 2010

We show, using novel data on currency and prices for US imports, that even conditional on a price change, there is a large difference in the exchange rate pass-through of the average good priced in dollars (25 percent) versus nondollars (95 percent). ...

Demographics and the Politics of Capital Taxation in a Life-Cycle Economy

By Xavier Mateos-Planas

American Economic Review, March 2010

This article studies the effects of demographics on the mix of tax rates on labor and capital. It uses a quantitative general-equilibrium, overlapping-generations model where tax rates are voted without past commitments in every period and characterize...

Can Multistage Production Explain the Home Bias in Trade?

By Kei-Mu Yi

American Economic Review, March 2010

A large empirical literature finds that there is too little international trade and too much intranational trade to be rationalized by observed international trade costs, such as tariffs and transport costs. This paper investigates whether a model in w...

Trade Agreements as Endogenously Incomplete Contracts

By Henrik Horn, Giovanni Maggi, and Robert W. Staiger

American Economic Review, March 2010

We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may be incomplete. In spite of its simplicity, the model yields rich predictions on the structure of the optimal trade agreement and how t...

Intergroup Conflict and Intra-group Punishment in an Experimental Contest Game

By Klaus Abbink, Jordi Brandts, Benedikt Herrmann, and Henrik Orzen

American Economic Review, March 2010

We study how conflict in contest games is influenced by rival parties being groups and by group members being able to punish each other. Our motivation stems from the analysis of sociopolitical conflict. The theoretical prediction is that conflict expe...

Building Routines: Learning, Cooperation, and the Dynamics of Incomplete Relational Contracts

By Sylvain Chassang

American Economic Review, March 2010

This paper studies how agents with conflicting interests learn to cooperate when the details of cooperation are not common knowledge. It considers a repeated game in which one player has incomplete information about when and how her partner can provide...

Interpersonal Authority in a Theory of the Firm

By Eric Van den Steen

American Economic Review, March 2010

This paper develops a theory of the firm in which a firm's centralized asset ownership and low-powered incentives give the manager, as an equilibrium outcome, interpersonal authority over employees (in a world with open disagreement). The paper thus pr...

Monetary Policy Rules and Macroeconomic Stability: Some New Evidence

By Sophocles Mavroeidis

American Economic Review, March 2010

I revisit the question of indeterminacy in US monetary policy using limited-information identification-robust methods. I find that the conclusions of Clarida, Galí, and Gernter (2000) that policy was inactive before 1979 are robust, but the evidenc...

Tournaments and Office Politics: Evidence from a Real Effort Experiment

By Jeffrey Carpenter, Peter Hans Matthews, and John Schirm

American Economic Review, March 2010

Tournaments can elicit more effort but sabotage may attenuate the effect of competition. Because it is hard to separate effort and ability, the evidence on tournaments is thin. There is even less evidence on sabotage because these acts often consist of su...

Financial Exchange Rates and International Currency Exposures

By Philip R. Lane and Jay C. Shambaugh

American Economic Review, March 2010

In order to gain a better empirical understanding of the international financial implications of currency movements, we construct a database of international currency exposures for a large panel of countries over 1990-2004. We show that trade-weighted exc...

Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Goods Experiments

By Urs Fischbacher and Simon Gächter

American Economic Review, March 2010

One lingering puzzle is why voluntary contributions to public goods decline over time in experimental and real-world settings. We show that the decline of cooperation is driven by individual preferences for imperfect conditional cooperation. Many people's...

Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam

By Tomomi Tanaka, Colin F. Camerer, and Quang Nguyen

American Economic Review, March 2010

We conducted experiments in Vietnamese villages to determine the predictors of risk and time preferences. In villages with higher mean income, people are less loss-averse and more patient. Household income is correlated with patience but not with risk. We...