The Economic History of the American Economic Review: A Century's Explosion of Economics Research

By Robert A. Margo

American Economic Review, February 2011

Written in celebration of the 100th anniversary of the American Economic Review, this paper recounts the history of the journal. The recounting has an analytic core that sees the American Economic Association as an organization supplying goods...

Some Unsettled Problems of Irrigation (1911)

By Katharine Coman

American Economic Review, February 2011

A reprint of the lead article in the inaugural issue of the American Economic Review, "Some Unsettled Problems of Irrigation," by Katharine Coman, who examined the common property resource problem as applied to water in the Western United States.

Reflections on "Some Unsettled Problems of Irrigation"

By Elinor Ostrom

American Economic Review, February 2011

It is instructive to read the article that Katharine Coman published in the first issue of the American Economic Review to gain insight into the problems of collective action related to irrigation in the American West. One gains further understanding of t...

Institutional Path Dependence in Climate Adaptation: Coman's "Some Unsettled Problems of Irrigation"

By Gary D. Libecap

American Economic Review, February 2011

Katharine Coman's "Some Unsettled Problems of Irrigation," published in March 1911 in the first issue of the American Economic Review, addressed issues of water supply, rights, and organization. These same issues have relevance today, in the face...

The Problem of the Commons: Still Unsettled after 100 Years

By Robert N. Stavins

American Economic Review, February 2011

The problem of the commons is more important to our lives and thus more central to economics than a century ago when Katharine Coman led off the first issue of the American Economic Review. As the US and other economies have grown, the carrying capacity ...

Two Illustrations of the Quantity Theory of Money: Breakdowns and Revivals

By Thomas J. Sargent and Paolo Surico

American Economic Review, February 2011

By extending his data, we document the instability of low-frequency regression coefficients that Lucas (1980) used to express the quantity theory of money. We impute the differences in these regression coefficients to differences in monetary policies acro...

Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes

By Devin G. Pope and Maurice E. Schweitzer

American Economic Review, February 2011

Although experimental studies have documented systematic decision errors, many leading scholars believe that experience, competition, and large stakes will reliably extinguish biases. We test for the presence of a fundamental bias, loss aversion, in a hig...

The Effect of Female Education on Fertility and Infant Health: Evidence from School Entry Policies Using Exact Date of Birth

By Justin McCrary and Heather Royer

American Economic Review, February 2011

This paper uses age-at-school-entry policies to identify the effect of female education on fertility and infant health. We focus on sharp contrasts in schooling, fertility, and infant health between women born just before and after the school entry date. ...

Growing Like China

By Zheng Song, Kjetil Storesletten, and Fabrizio Zilibotti

American Economic Review, February 2011

We construct a growth model consistent with China's economic transition: high output growth, sustained returns on capital, reallocation within the manufacturing sector, and a large trade surplus. Entrepreneurial firms use more productive technologies, but...

Reference Prices, Costs, and Nominal Rigidities

By Martin Eichenbaum, Nir Jaimovich, and Sergio Rebelo

American Economic Review, February 2011

We assess the importance of nominal rigidities using a new weekly scanner dataset. We find that nominal rigidities take the form of inertia in reference prices and costs, defined as the most common prices and costs within a given quarter. Reference price...

Bundle-Size Pricing as an Approximation to Mixed Bundling

By Chenghuan Sean Chu, Phillip Leslie, and Alan Sorensen

American Economic Review, February 2011

Multiproduct firms can set separate prices for all possible bundled combinations of its products "mixed bundling"). However, this is impractical for firms with more than a few products, because the number of prices increases exponentially with the number ...

Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms

By Paula Bustos

American Economic Review, February 2011

This paper studies the impact of a regional free trade agreement, MERCOSUR, on technology upgrading by Argentinean firms. To guide empirical work, I introduce technology choice in a model of trade with heterogeneous firms. The joint treatment of the techn...

Monetary Policy, Trend Inflation, and the Great Moderation: An Alternative Interpretation

By Olivier Coibion and Yuriy Gorodnichenko

American Economic Review, February 2011

With positive trend inflation, the Taylor principle does not guarantee a determinate equilibrium. We provide new theoretical results on determinacy in New Keynesian models with positive trend inflation and new empirical findings on the Federal Reserve's r...

Inflation and Unemployment in the Long Run

By Aleksander Berentsen, Guido Menzio, and Randall Wright

American Economic Review, February 2011

We study the long-run relation between money (inflation or interest rates) and unemployment. We document positive relationships between these variables at low frequencies. We develop a framework where money and unemployment are modeled using explicit micr...

Resolving Conflicting Preferences in School Choice: The "Boston Mechanism" Reconsidered

By Atila Abdulkadiroğlu, Yeon-Koo Che, and Yosuke Yasuda

American Economic Review, February 2011

Despite its widespread use, the Boston mechanism has been criticized for its poor incentive and welfare performances compared to the Gale-Shapley deferred acceptance algorithm (DA). By contrast, when students have the same ordinal preferences and schools ...

The Evolution of Cooperation in Infinitely Repeated Games: Experimental Evidence

By Pedro Dal Bó and Guillaume R. Fréchette

American Economic Review, February 2011

A usual criticism of the theory of infinitely repeated games is that it does not provide sharp predictions since there may be a multiplicity of equilibria. To address this issue, we present experimental evidence on the evolution of cooperation in infinite...

Front Matter

Journal of Economic Perspectives, Winter 2011

A Macroprudential Approach to Financial Regulation

[Symposium: Financial Regulation after the Crisis]

By Samuel G. Hanson, Anil K. Kashyap, and Jeremy C. Stein

Journal of Economic Perspectives, Winter 2011

Many observers have argued that the regulatory framework in place prior to the global financial crisis was deficient because it was largely "microprudential" in nature. A microprudential approach is one in which regulation is partial equilibrium in its co...

Fire Sales in Finance and Macroeconomics

[Symposium: Financial Regulation after the Crisis]

By Andrei Shleifer and Robert Vishny

Journal of Economic Perspectives, Winter 2011

Analysts of the recent financial crisis often refer to the role of asset "fire sales" in depleting the balance sheets of financial institutions and aggravating the fragility of the financial system. The term "fire sale" has been around since the nineteent...

Over the Cliff: From the Subprime to the Global Financial Crisis

[Symposium: Financial Regulation after the Crisis]

By Frederic S. Mishkin

Journal of Economic Perspectives, Winter 2011

The financial crisis of 2007 to 2009 can be divided into two distinct phases. The first and more limited phase from August 2007 to August 2008 stemmed from losses in one relatively small segment of the U.S. financial system—namely, subprime resident...