Impressionable Voters

By Costel Andonie and Daniel Diermeier

American Economic Journal: Microeconomics, February 2019

We propose a model of impressionable voters. Impressionable voters vote based on impressions rather than maximizing expected utility. We apply our model to elections with multiple candidates and solve for the stationary distributions of the implied stocha...

The Risk of Failure: Trial and Error Learning and Long-Run Performance

By Steven Callander and Niko Matouschek

American Economic Journal: Microeconomics, February 2019

Innovation is often the key to sustained progress, yet innovation itself is difficult and highly risky. Success is not guaranteed as breakthroughs are mixed with setbacks and the path of learning is typically far from smooth. How decision makers learn by ...

Self-Fulfilling Debt Crises: A Quantitative Analysis

By Luigi Bocola and Alessandro Dovis

American Economic Review, December 2019

This paper investigates the role of self-fulfilling expectations in sovereign bond markets. We consider a model of sovereign borrowing featuring endogenous debt maturity, risk-averse lenders, and self-fulfilling crises à la Cole and Kehoe (2000). In this...

Firm Uncertainty Cycles and the Propagation of Nominal Shocks

By Isaac Baley and Andrés Blanco

American Economic Journal: Macroeconomics, January 2019

We develop a framework to study the impact of idiosyncratic uncertainty on aggregate economic outcomes. Agents learn about individual characteristics, which receive infrequent, large, and persistent shocks. In this environment, idiosyncratic uncertainty m...

Maimonides' Rule Redux

By Joshua D. Angrist, Victor Lavy, Jetson Leder-Luis, and Adi Shany

American Economic Review: Insights, December 2019

We use Maimonides' rule as an instrument for class size in large Israeli samples from 2002–2011. In contrast with Angrist and Lavy (1999), newer estimates show no evidence of class size effects. The new data also reveal enrollment manipulation near Maim...

Front Matter

American Economic Journal: Applied Economics, October 2018

Did Unconventional Interventions Unfreeze the Credit Market?

By Hui Tong and Shang-Jin Wei

American Economic Journal: Macroeconomics, April 2020

This paper investigates whether and how unconventional interventions in 2008–2010 unfroze the credit market. We construct a dataset of 198 interventions for 16 countries during 2008–2010 and examine heterogeneous responses in stock prices to the inter...

Contracts with Framing

By Yuval Salant and Ron Siegel

American Economic Journal: Microeconomics, August 2018

We study a model of contracts in which a profit-maximizing seller uses framing to influence buyers' purchasing behavior. Framing temporarily affects how buyers evaluate different products, and buyers can renege on their purchases after the framing effect ...

Employed for Higher Pay? How Medicare Payment Rules Affect Hospital Employment of Physicians

By David Dranove and Christopher Ody

American Economic Journal: Economic Policy, November 2019

Hospitals employ an increasing number of physicians and bill for a growing share of outpatient procedures. We exploit a plausibly exogenous increase in Medicare prices for hospital-employed physicians relative to Medicare prices for other physicians to sh...

Minutes of the Meeting of the Executive Committee, Chicago, IL, April 20, 2018

By Peter L. Rousseau

AEA Papers and Proceedings, May 2019

Retrospectives: On the Genius Behind David Ricardo's 1817 Formulation of Comparative Advantage

By Daniel M. Bernhofen and John C. Brown

Journal of Economic Perspectives, Fall 2018

Last year marked the 200th anniversary of Ricardo's famous "four numbers" paragraph on comparative advantage, which is one of the oldest analytical results in economics. Following the lead of James Mill (1821), these four numbers have been interpreted as ...

Maternal Depression, Women's Empowerment, and Parental Investment: Evidence from a Randomized Controlled Trial

By Victoria Baranov, Sonia Bhalotra, Pietro Biroli, and Joanna Maselko

American Economic Review, March 2020

We evaluate the medium-term impacts of treating maternal depression on women's mental health, financial empowerment, and parenting decisions. We leverage variation induced by a cluster-randomized controlled trial that provided psychotherapy to 903 prenata...

Financial Incentives and the Fertility-Sex Ratio Trade-Off

By S Anukriti

American Economic Journal: Applied Economics, April 2018

Can financial incentives resolve the fertility-sex ratio trade-off faced by countries with persistent son preference and easy access to sex-selection technology? An Indian program, Devi Rupak, that seeks to lower fertility and the sex ratio is unable to d...

Commuting, Migration, and Local Employment Elasticities

By Ferdinando Monte, Stephen J. Redding, and Esteban Rossi-Hansberg

American Economic Review, December 2018

We provide theory and evidence that the elasticity of local employment to a labor demand shock is heterogeneous depending on the commuting openness of the local labor market. We develop a quantitative general equilibrium model that incorporates spatial li...

Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field

By Arun G. Chandrasekhar, Cynthia Kinnan, and Horacio Larreguy

American Economic Journal: Applied Economics, October 2018

Lack of well-functioning formal institutions leads to reliance on social networks to enforce informal contracts. Social proximity and network centrality may affect cooperation. To assess the extent to which networks substitute for enforcement, we conducte...

Identifying and Estimating Neighborhood Effects

By Bryan S. Graham

Journal of Economic Literature, June 2018

Residential segregation by race and income are enduring features of urban America. Understanding the effects of residential segregation on educational attainment, labor market outcomes, criminal activity, and other outcomes has been a leading project of t...

Identifying Sorting in Practice

By Cristian Bartolucci, Francesco Devicienti, and Ignacio Monzón

American Economic Journal: Applied Economics, October 2018

We propose a novel methodology to uncover the sorting pattern in labor markets. We identify the strength of sorting solely from a ranking of firms by profits. To discern the sign of sorting, we build a noisy ranking of workers from wage data. Our test for...

Why Did the Democrats Lose the South? Bringing New Data to an Old Debate

By Ilyana Kuziemko and Ebonya Washington

American Economic Review, October 2018

A long-standing debate in political economy is whether voters are driven primarily by economic self-interest or by less pecuniary motives like ethnocentrism. Using newly available data, we reexamine one of the largest partisan shifts in a modern democracy...

Dynamic Certification and Reputation for Quality

By Iván Marinovic, Andrzej Skrzypacz, and Felipe Varas

American Economic Journal: Microeconomics, May 2018

We study firm's incentives to build and maintain reputation for quality, when quality is persistent and can be certified at a cost. We characterize all reputation-dependent MPEs. They vary in frequency of certification and payoffs. Low payoffs arise in eq...

Temporary Price Changes, Inflation Regimes, and the Propagation of Monetary Shocks

By Fernando Alvarez and Francesco Lippi

American Economic Journal: Macroeconomics, January 2020

We present a sticky price model that features the coexistence of many price changes, most of which are temporary, with a modest flexibility of the aggregate price level. Stickiness is introduced in the form of a price plan, namely a set of two prices: eit...