Intermediate Goods and Weak Links in the Theory of Economic Development

By Charles I. Jones

American Economic Journal: Macroeconomics, April 2011

What explains the enormous differences in incomes across countries? This paper returns to two old ideas: linkages and complementarity. First, linkages between firms through intermediate goods deliver a multiplier similar to the one associated with capita...

Growth Accounting with Misallocation: Or, Doing Less with More in Singapore

By John Fernald and Brent Neiman

American Economic Journal: Macroeconomics, April 2011

We show that in a two-sector economy with heterogeneous capital subsidies and monopoly power, primal and dual measures of TFP growth can diverge from each other as well as from true technology. These distortions give rise to dynamic reallocation effects t...

How Sovereign Is Sovereign Credit Risk?

By Francis A. Longstaff, Jun Pan, Lasse H. Pedersen, and Kenneth J. Singleton

American Economic Journal: Macroeconomics, April 2011

We study the nature of sovereign credit risk using an extensive set of sovereign CDS data. We find that the majority of sovereign credit risk can be linked to global factors. A single principal component accounts for 64 percent of the variation in soverei...

Are Long-Run Inflation Expectations Anchored More Firmly in the Euro Area Than in the United States?

By Meredith J. Beechey, Benjamin K. Johannsen, and Andrew T. Levin

American Economic Journal: Macroeconomics, April 2011

This paper compares the evolution of long-run inflation expectations in the euro area and the United States, using evidence from financial markets and surveys of professional forecasters. Survey data indicate that long-run inflation expectations are reaso...

Welfare-Based Optimal Monetary Policy with Unemployment and Sticky Prices: A Linear-Quadratic Framework

By Federico Ravenna and Carl E. Walsh

American Economic Journal: Macroeconomics, April 2011

We derive a linear-quadratic model that is consistent with sticky prices and search and matching frictions in the labor market. We show that the second-order approximation to the welfare of the representative agent depends on inflation and "gaps" that inv...

Product Market Regulation and Market Work: A Benchmark Analysis

By Lei Fang and Richard Rogerson

American Economic Journal: Macroeconomics, April 2011

Recent empirical work finds a negative correlation between product market regulation and aggregate employment. We examine the effect of product market regulations on hours worked in a benchmark model of time allocation. Product market regulations affect m...

Did Improvements in Household Technology Cause the Baby Boom? Evidence from Electrification, Appliance Diffusion, and the Amish

By Martha J. Bailey and William J. Collins

American Economic Journal: Macroeconomics, April 2011

We examine the hypothesis that advances in household technology caused the US baby boom, and we find no support for this claim. Advances in household technology occurred before the baby boom, while fertility declined. From 1940 to 1960, levels/changes in ...

Family Firms and Labor Relations

By Holger M. Mueller and Thomas Philippon

American Economic Journal: Macroeconomics, April 2011

This paper examines the relationship between family ownership and the quality of labor relations. We find that family ownership is more prevalent in countries in which labor relations are hostile, consistent with the notion that family firms are particula...

Evaluating the Classification of Economic Activity into Recessions and Expansions

By Travis J. Berge and Òscar Jordà

American Economic Journal: Macroeconomics, April 2011

The Business Cycle Dating Committee of the National Bureau of Economic Research provides a historical chronology of business cycle turning points. We investigate three central aspects of this chronology. How skillful is the Dating Committee when classifyi...

Front Matter

American Economic Journal: Applied Economics, April 2011

Mechanisms and Impacts of Gender Peer Effects at School

By Victor Lavy and Analia Schlosser

American Economic Journal: Applied Economics, April 2011

We present in this paper evidence about the effects and mechanisms of gender peer effects in elementary, middle, and high schools. For identification, we rely on idiosyncratic variations in gender composition across adjacent cohorts within the same school...

The Wrong Side(s) of the Tracks: The Causal Effects of Racial Segregation on Urban Poverty and Inequality

By Elizabeth Oltmans Ananat

American Economic Journal: Applied Economics, April 2011

A striking negative correlation exists between an area's residential racial segregation and its population characteristics, but it is recognized that this relationship may not be causal. I present a novel test of causality from segregation to population ...

Peers, Neighborhoods, and Immigrant Student Achievement: Evidence from a Placement Policy

By Olof Åslund, Per-Anders Edin, Peter Fredriksson, and Hans Grönqvist

American Economic Journal: Applied Economics, April 2011

We examine to what extent immigrant school performance is affected by the characteristics of the neighborhoods that they grow up in. We address this issue using a refugee placement policy that provides exogenous variation in the initial place of residenc...

Schooling and the Vietnam-Era GI Bill: Evidence from the Draft Lottery

By Joshua D. Angrist and Stacey H. Chen

American Economic Journal: Applied Economics, April 2011

Draft-lottery estimates of the causal effects of Vietnam-era military service using 2000 census data show marked schooling gains for veterans. We argue that these gains can be attributed to Vietnam veterans' use of the GI Bill rather than draft avoidance ...

Conscription and Crime: Evidence from the Argentine Draft Lottery

By Sebastian Galiani, Martín A. Rossi, and Ernesto Schargrodsky

American Economic Journal: Applied Economics, April 2011

We estimate the causal effect of mandatory participation in military service on individuals' subsequent involvement in criminal activities. To identify this causal effect, we exploit the random assignment of young men to conscription in Argentina through...

Purchasing Power Parity Exchange Rates for the Global Poor

By Angus Deaton and Olivier Dupriez

American Economic Journal: Applied Economics, April 2011

The global poverty count uses a common global poverty line, often referred to as the dollar-a-day line, currently $1.25 at 2005 international prices, whose construction and application depends on purchasing power parity (PPP) exchange rates for consumptio...

Improving the Design of Conditional Transfer Programs: Evidence from a Randomized Education Experiment in Colombia

By Felipe Barrera-Osorio, Marianne Bertrand, Leigh L. Linden, and Francisco Perez-Calle

American Economic Journal: Applied Economics, April 2011

Using a student level randomization, we compare three education-based conditional cash transfers designs: a standard design, a design where part of the monthly transfers are postponed until children have to re-enroll in school, and a design that lowers th...

The Price of Political Opposition: Evidence from Venezuela's Maisanta

By Chang-Tai Hsieh, Edward Miguel, Daniel Ortega, and Francisco Rodriguez

American Economic Journal: Applied Economics, April 2011

In 2004, the Hugo Chávez regime in Venezuela distributed the list of several million voters who had attempted to remove him from office throughout the government bureaucracy, allegedly to identify and punish these voters. We match the list of pet...

Front Matter

American Economic Review, April 2011

Front Matter includes photograph of Robert E. Hall as part of a series of photographs of past presidents of the Association.

The Long Slump

By Robert E. Hall

American Economic Review, April 2011

In a market-clearing economy, declines in demand from one sector do not cause large declines in aggregate output because other sectors expand. The key price mediating the response is the interest rate. A decline in the rate stimulates all categories of sp...