The European Sovereign Debt Crisis

[Symposium: Government Debt]

By Philip R. Lane

Journal of Economic Perspectives, Summer 2012

The origin and propagation of the European sovereign debt crisis can be attributed to the flawed original design of the euro. In particular, there was an incomplete understanding of the fragility of a monetary union under crisis conditions, especially in ...

Public Debt Overhangs: Advanced-Economy Episodes since 1800

[Symposium: Government Debt]

By Carmen M. Reinhart, Vincent R. Reinhart, and Kenneth S. Rogoff

Journal of Economic Perspectives, Summer 2012

We identify the major public debt overhang episodes in the advanced economies since the early 1800s, characterized by public debt to GDP levels exceeding 90 percent for at least five years. Consistent with Reinhart and Rogoff (2010) and most of the more ...

The Economics of Spam

By Justin M. Rao and David H. Reiley

Journal of Economic Perspectives, Summer 2012

We estimate that American firms and consumers experience costs of almost $20 billion annually due to spam. Our figure is more conservative than the $50 billion figure often cited by other authors, and we also note that the figure would be much higher if i...

Identifying the Disadvantaged: Official Poverty, Consumption Poverty, and the New Supplemental Poverty Measure

By Bruce D. Meyer and James X. Sullivan

Journal of Economic Perspectives, Summer 2012

We discuss poverty measurement, focusing on two alternatives to the current official measure: consumption poverty, and the Census Bureau's new Supplemental Poverty Measure (SPM) that was released for the first time last year. The SPM has advantages over ...

The New Demographic Transition: Most Gains in Life Expectancy Now Realized Late in Life

By Karen N. Eggleston and Victor R. Fuchs

Journal of Economic Perspectives, Summer 2012

The share of increases in life expectancy realized after age 65 was only about 20 percent at the beginning of the 20th century for the United States and 16 other countries at comparable stages of development; but that share was close to 80 percent by the ...

Groups Make Better Self-Interested Decisions

By Gary Charness and Matthias Sutter

Journal of Economic Perspectives, Summer 2012

In this paper, we describe what economists have learned about differences between group and individual decision-making. This literature is still young, and in this paper, we will mostly draw on experimental work (mainly in the laboratory) that has compare...

Deleveraging and Monetary Policy: Japan since the 1990s and the United States since 2007

By Kazuo Ueda

Journal of Economic Perspectives, Summer 2012

As the U.S. economy works through a sluggish recovery several years after the Great Recession technically came to an end in June 2009, it can only look with horror toward Japan's experience of two decades of stagnant growth since the early 1990s. In contr...

The Relationship between Unit Cost and Cumulative Quantity and the Evidence for Organizational Learning-by-Doing

By Peter Thompson

Journal of Economic Perspectives, Summer 2012

The concept of a learning curve for individuals has been around since the beginning of the twentieth century. The idea that an analogous phenomenon might also apply at the level of the organization took longer to emerge, but it had begun to figure promine...

Recommendations for Further Reading

By Timothy Taylor

Journal of Economic Perspectives, Summer 2012

Notes

Journal of Economic Perspectives, Summer 2012

Front Matter

American Economic Review, August 2012

Including William C. Brainard: Distinguished Fellow 2011

A Field Study on Matching with Network Externalities

By Mariagiovanna Baccara, Ayşe İmrohoroğlu, Alistair J. Wilson, and Leeat Yariv

American Economic Review, August 2012

We study the effects of network externalities within a protocol for matching faculty to offices in a new building. Using web and survey data on faculty's attributes and choices, we identify the different layers of the social network: institutional affili...

Pay for Percentile

By Gadi Barlevy and Derek Neal

American Economic Review, August 2012

We propose an incentive scheme for educators that links compensation to the ranks of their students within comparison sets. Under certain conditions, this scheme induces teachers to allocate socially optimal levels of effort. Moreover, because this scheme...

Europe's Tired, Poor, Huddled Masses: Self-Selection and Economic Outcomes in the Age of Mass Migration

By Ran Abramitzky, Leah Platt Boustan, and Katherine Eriksson

American Economic Review, August 2012

During the age of mass migration (1850-1913), one of the largest migration episodes in history, the United States maintained a nearly open border, allowing the study of migrant decisions unhindered by entry restrictions. We estimate the return to migratio...

Social Capital and Social Quilts: Network Patterns of Favor Exchange

By Matthew O. Jackson, Tomas Rodriguez-Barraquer, and Xu Tan

American Economic Review, August 2012

We examine the informal exchange of favors in societies such that any two individuals interact too infrequently to sustain exchange, but such that the social pressure of the possible loss of multiple relationships can sustain exchange. Patterns of exchang...

A Rational Expectations Approach to Hedonic Price Regressions with Time-Varying Unobserved Product Attributes: The Price of Pollution

By Patrick Bajari, Jane Cooley Fruehwirth, Kyoo il Kim, and Christopher Timmins

American Economic Review, August 2012

We propose a new strategy for a pervasive problem in the hedonics literature: recovering hedonic prices in the presence of time-varying correlated unobservables. Our approach relies on an assumption about home buyer rationality, under which prior sales pr...

The Impact of Family Income on Child Achievement: Evidence from the Earned Income Tax Credit

By Gordon B. Dahl and Lance Lochner

American Economic Review, August 2012

Using an instrumental variables strategy, we estimate the causal effect of income on children's math and reading achievement. Our identification derives from the large, nonlinear changes in the Earned Income Tax Credit. The largest of these changes increa...

Bundling and Competition for Slots

By Doh-Shin Jeon and Domenico Menicucci

American Economic Review, August 2012

We consider competition between sellers selling multiple distinct products to a buyer having k slots. Under independent pricing, a pure strategy equilibrium often does not exist, and equilibrium in mixed strategy is never efficient. When bundling is allo...

Fund Managers, Career Concerns, and Asset Price Volatility

By Veronica Guerrieri and Péter Kondor

American Economic Review, August 2012

We propose a model of delegated portfolio management with career concerns. Investors hire fund managers to invest their capital either in risky bonds or in riskless assets. Some managers have superior information on default risk. Based on past performance...

Organ Allocation Policy and the Decision to Donate

By Judd B. Kessler and Alvin E. Roth

American Economic Review, August 2012

Organ donations from deceased donors provide the majority of transplanted organs in the United States, and one deceased donor can save numerous lives by providing multiple organs. Nevertheless, most Americans are not registered organ donors despite the re...