Corporate Finance and Monetary Policy

By Guillaume Rocheteau, Randall Wright, and Cathy Zhang

American Economic Review, April 2018

We develop a general equilibrium model where entrepreneurs finance random investment opportunities using trade credit, bank-issued assets, or currency. They search for bank funding in over-the-counter markets where loan sizes, interest rates, and down pay...

Do Human Capital Decisions Respond to the Returns to Education? Evidence from DACA

By Elira Kuka, Na'ama Shenhav, and Kevin Shih

American Economic Journal: Economic Policy, February 2020

This paper studies human capital responses to the availability of the Deferred Action for Childhood Arrivals (DACA) program, which provides temporary work authorization and deferral from deportation for undocumented, high-school-educated youth. We use a s...

Modeling Risk Aversion in Economics

[Symposium: Risk in Economics and Psychology]

By Ted O'Donoghue and Jason Somerville

Journal of Economic Perspectives, Spring 2018

To capture the risk-aversion intuition, the standard approach in economics has been to utilize the model of expected utility, in which risk aversion derives from diminishing marginal utility for wealth (or diminishing marginal utility for aggregate co...

Financing Durable Assets

By Adriano A. Rampini

American Economic Review, February 2019

This paper studies how the durability of assets affects financing. We show that more durable assets require larger down payments making them harder to finance, because durability affects the price of assets and hence the overall financing need more than t...

Front Matter

American Economic Journal: Macroeconomics, October 2018

Is Government Spending at the Zero Lower Bound Desirable?

By Florin O. Bilbiie, Tommaso Monacelli, and Roberto Perotti

American Economic Journal: Macroeconomics, July 2019

We build a medium-scale DSGE model and calibrate it to fit the main macroeconomic variables during the US Great Recession. Using it to evaluate the welfare effects of increasing government consumption at the zero lower bound beyond what was actually obser...

Do Larger Health Insurance Subsidies Benefit Patients or Producers? Evidence from Medicare Advantage

By Marika Cabral, Michael Geruso, and Neale Mahoney

American Economic Review, August 2018

A central question in the debate over privatized Medicare is whether increased government payments to private Medicare Advantage (MA) plans generate lower premiums for consumers or higher profits for producers. Using difference-in-differences variation br...

Do Energy Efficiency Investments Deliver at the Right Time?

By Judson Boomhower and Lucas Davis

American Economic Journal: Applied Economics, January 2020

Most analyses of energy efficiency investments ignore that the value of electricity varies widely across hours. We show how much timing matters. Using novel hourly consumption data from an air conditioner rebate program in California, we find that energy ...

Trust the Police? Self-Selection of Motivated Agents into the German Police Force

By Guido Friebel, Michael Kosfeld, and Gerd Thielmann

American Economic Journal: Microeconomics, November 2019

We conduct experimental games with police applicants in Germany to investigate whether intrinsically motivated agents self-select into this type of public service. Our focus is on trustworthiness and the willingness to enforce norms of cooperation as key ...

Are Risk Preferences Stable?

[Symposium: Risk in Economics and Psychology]

By Hannah Schildberg-Hörisch

Journal of Economic Perspectives, Spring 2018

It is ultimately an empirical question whether risk preferences are stable over time. The evidence comes from diverse strands of literature, covering the stability of risk preferences in panel data over shorter periods of time, life-cycle dynamics in ri...

Temporary Protection and Technology Adoption: Evidence from the Napoleonic Blockade

By Réka Juhász

American Economic Review, November 2018

This paper uses a natural experiment to estimate the causal effect of temporary trade protection on long-term economic development. I find that regions in the French Empire which became better protected from trade with the British for exogenous reasons du...

The Effect of Export Promotion on Firm-Level Performance

By Jakob Munch and Georg Schaur

American Economic Journal: Economic Policy, February 2018

Most countries promote exports. This paper answers two questions: Does export promotion improve firm performance, and do any benefits outweigh costs? We solve self-selection problems by accounting for an extensive set of firm characteristics. In addition,...

Representations of Men and Women in Introductory Economics Textbooks

By Betsey Stevenson and Hanna Zlotnik

AEA Papers and Proceedings, May 2018

This paper examines the frequency and ways in which men and women appear in principles of economics textbooks. Men account for more than 90 percent of business leaders, policymakers, and economists mentioned in textbooks. In addition, women are a minority...

Cartels Uncovered

By Ari Hyytinen, Frode Steen, and Otto Toivanen

American Economic Journal: Microeconomics, November 2018

How many cartels are there, and how long do they live? The answers to these questions are important in assessing the need for competition policy. We present a Hidden Markov Model that takes into account that often it is not known whether a cartel exists o...

Does Cheap Talk Affect Market Outcomes? Evidence from eBay

By Daniel W. Elfenbein, Raymond Fisman, and Brian McManus

American Economic Journal: Applied Economics, October 2019

We study cheap talk by firms and responses by their consumers, focusing on unverifiable promises of charitable donations on eBay during 2005–2006. Cheap talk listings have lower sales probabilities but sell at higher prices when successful. The negative...

Front Matter

Journal of Economic Perspectives, Summer 2018

Are Low Interest Rates Deflationary? A Paradox of Perfect-Foresight Analysis

By Mariana García-Schmidt and Michael Woodford

American Economic Review, January 2019

We argue that an influential "neo-Fisherian" analysis of the effects of low interest rates depends on using perfect foresight equilibrium analysis under circumstances where it is not plausible for people to hold expectations of that kind. We propose an ex...

Emotional Judges and Unlucky Juveniles

By Ozkan Eren and Naci Mocan

American Economic Journal: Applied Economics, July 2018

Employing the universe of juvenile court decisions in a U.S. state between 1996 and 2012, we analyze the effects of emotional shocks associated with unexpected outcomes of football games played by a prominent college team in the state. We find that unexpe...

Early Childhood Education by Television: Lessons from Sesame Street

By Melissa S. Kearney and Phillip B. Levine

American Economic Journal: Applied Economics, January 2019

We investigate whether preschool-age children exposed to Sesame Street when it aired in 1969 experienced improved educational and labor market outcomes. We exploit geographic variation in broadcast reception derived from technological factors, namely UHF ...

Front Matter

American Economic Review, August 2018