Clean hands and dirty jobs

[Research Highlight]

June 16, 2020

How much do politicians’ relatives get special treatment on the job market?

Politics in the Family: Nepotism and the Hiring Decisions of Italian Firms

By Stefano Gagliarducci and Marco Manacorda

American Economic Journal: Applied Economics, April 2020

This paper studies the effect of family connections to politicians on individuals' labor market outcomes. Using data for Italy spanning more than three decades on a sample of almost one million individuals plus data on the universe of individuals holding ...

The enduring effect of communism

[Page]

East Germany hasn’t caught up with the rest of the country. Why?

Rethinking racial discrimination

[Research Highlight]

June 19, 2020

Harvard professor Mario Small discusses how sociology can help economics diversify its perspective.

Front Matter

American Economic Journal: Macroeconomics, July 2020

Sticky Expectations and Consumption Dynamics

By Christopher D. Carroll, Edmund Crawley, Jiri Slacalek, Kiichi Tokuoka, and Matthew N. White

American Economic Journal: Macroeconomics, July 2020

To match aggregate consumption dynamics, macroeconomic models must generate "excess smoothness" in consumption expenditures. But microfounded models are calibrated to match micro data, which exhibit no "excess smoothness." So standard microfounded models ...

Liquidity Traps and Monetary Policy: Managing a Credit Crunch

By Francisco J. Buera and Juan Pablo Nicolini

American Economic Journal: Macroeconomics, July 2020

We study a model with heterogeneous producers that face collateral and cash-in-advance constraints. A tightening of the collateral constraint results in a credit-crunch-generated recession that reproduces some features of the financial crisis that unravel...

Optimal Capital Requirements over the Business and Financial Cycles

By Frederic Malherbe

American Economic Journal: Macroeconomics, July 2020

I study economies where banks do not fully internalize the social costs of their lending decisions, which leads to real overinvestment. The bank capital requirement that restores investment efficiency varies over time. During booms, more investment is des...

Non-neutrality of Open-Market Operations

By Pierpaolo Benigno and Salvatore Nisticò

American Economic Journal: Macroeconomics, July 2020

We analyze the effects on inflation and output of unconventional open-market operations due to the possible income losses on the central bank's balance sheet. We first state a general Neutrality Property, and characterize the theoretical conditions suppor...

Managing the UK National Debt 1694–2018

By Martin Ellison and Andrew Scott

American Economic Journal: Macroeconomics, July 2020

We examine UK debt management using a new monthly dataset on the quantity and market price of every individual bond issued by the government since 1694. Our bond-by-bond dataset identifies variations in the market value of debt and so captures investors' ...

A Central Bank Theory of Price Level Determination

By Pierpaolo Benigno

American Economic Journal: Macroeconomics, July 2020

This paper develops a theory in which the central bank can control the price level without fiscal backing. It is shown that the remittances policy and the balance sheet of the central bank are important elements to specify. A central bank that is appropri...

Sticky Wage Models and Labor Supply Constraints

By Zhen Huo and José-Víctor Ríos-Rull

American Economic Journal: Macroeconomics, July 2020

In sticky wages models (either à la Calvo or à la Rotemberg), labor is solely determined by the demand side. However, a change of circumstances may make labor demand higher than agents' willingness to work. We find that workers are required to work agai...