By incorporating the probability distribution directly into the analysis, this paper proposes a new theoretical approach to resolving the perennial dilemma of being uncertain about what discount rate to use in cost-benefit analysis. A numerical example is...

www.aeaweb.org/articles?id=10.1257/aer.91.1.260

Proofs and Prototypes for Sale: The Licensing of University Inventions

By Richard Jensen and Marie Thursby

American Economic Review, March 2001

Proponents of the Bayh-Dole Act argue that industrial use of federally funded research would be reduced without university patent licensing. Our survey of U.S. universities supports this view, emphasizing the embryonic state of most technologies licensed ...

www.aeaweb.org/articles?id=10.1257/aer.91.1.240

The Provision of Public Goods under Alternative Electoral Incentives

By Alessandro Lizzeri and Nicola Persico

American Economic Review, March 2001

Politicians who care about the spoils of office may underprovide a public good because its benefits cannot be targeted to voters as easily as pork-barrel spending. We compare a winner-take-all system--where all the spoils go to the winner--to a proportion...

www.aeaweb.org/articles?id=10.1257/aer.91.1.225

Local Discouragement and Global Collapse: A Theory of Coordination Avalanches

By Thomas D. Jeitschko and Curtis R. Taylor

American Economic Review, March 2001

We study a dynamic game in which all players initially possess the same information and coordinate on a high level of activity. Eventually, players with a long string of bad experiences become inactive. This prospect can cause a coordination avalanche in ...

www.aeaweb.org/articles?id=10.1257/aer.91.1.208

What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets

By Olivier Blanchard and Pedro Portugal

American Economic Review, March 2001

Behind similar unemployment rates in the United States and Portugal hide two very different labor markets. Unemployment duration is three times longer in Portugal than in the United States. Symmetrically, flows of workers into unemployment are three times...

www.aeaweb.org/articles?id=10.1257/aer.91.1.187

Monetary Policy and Multiple Equilibria

By Jess Benhabib, Stephanie Schmitt-Grohé, and Martín Uribe

American Economic Review, March 2001

This paper characterizes conditions under which interest-rate feedback rules that set the nominal interest rate as an increasing function of the inflation rate induce aggregate instability by generating multiple equilibria. It shows that these conditions ...

www.aeaweb.org/articles?id=10.1257/aer.91.1.167

Habit Persistence, Asset Returns, and the Business Cycle

By Michele Boldrin, Lawrence J. Christiano, and Jonas D. M. Fisher

American Economic Review, March 2001

Two modifications are introduced into the standard real-business-cycle model: habit preferences and a two-sector technology with limited intersectoral factor mobility. The model is consistent with the observed mean risk-free rate, equity premium, and Shar...

www.aeaweb.org/articles?id=10.1257/aer.91.1.149

The Effects of Investing Social Security Funds in the Stock Market When Fixed Costs Prevent Some Households from Holding Stocks

By Andrew B. Abel

American Economic Review, March 2001

With fixed costs of participating in the stock market, consumers with high income will participate in the stock market, but consumers with lower income will not participate. If a fully funded defined-contribution Social Security system tries to exploit th...

www.aeaweb.org/articles?id=10.1257/aer.91.1.128

Who Should Buy Long-Term Bonds?

By John Y. Campbell and LuisM. Viceira

American Economic Review, March 2001

According to conventional wisdom, long-term bonds are appropriate for conservative long-term investors. This paper develops a model of optimal consumption and portfolio choice for infinite-lived investors with recursive utility who face stochastic interes...

www.aeaweb.org/articles?id=10.1257/aer.91.1.99

Naive Diversification Strategies in Defined Contribution Saving Plans

By Shlomo Benartzi and Richard H. Thaler

American Economic Review, March 2001

There is a worldwide trend toward defined contribution saving plans and growing interest in privatized Social Security plans. In both environments, individuals are given some responsibility to make their own asset-allocation decisions, raising concerns ab...

www.aeaweb.org/articles?id=10.1257/aer.91.1.79

Dividends and Expropriation

By Mara Faccio, Larry H. P. Lang, and Leslie Young

American Economic Review, March 2001

Whereas most U.S. corporations are widely held, the predominant form of ownership in East Asia is control by a family, which often supplies a top manager. These features of "crony capitalism" are actually more pronounced in Western Europe. In both regions...

www.aeaweb.org/articles?id=10.1257/aer.91.1.54

Information Technology and the U.S. Economy

By Dale W. Jorgenson

American Economic Review, March 2001

www.aeaweb.org/articles?id=10.1257/aer.91.1.1

The Personal Discount Rate: Evidence from Military Downsizing Programs

By John T. Warner and Saul Pleeter

American Economic Review, March 2001

The military drawdown program of the early 1990s provides an opportunity to obtain estimates of personal discount rates based on large numbers of people making real choices involving large sums. The program offered over 65,000 separatees the choice betwee...

www.aeaweb.org/articles?id=10.1257/aer.91.1.33