Are Credit Markets Still Local? Evidence from Bank Branch Closings

By Hoai-Luu Q. Nguyen

American Economic Journal: Applied Economics, January 2019

This paper studies whether distance shapes credit allocation by estimating the impact of bank branch closings during the 2000s on local access to credit. To generate plausibly exogenous variation in the incidence of closings, I use an instrument based on ...

The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment

By Matias Busso and Sebastian Galiani

American Economic Journal: Applied Economics, January 2019

This paper provides experimental evidence on the effect of increased competition on prices and quality in the retail sector. We randomized the entry of 61 firms into 72 markets serving the beneficiaries of a conditional cash transfer program in the Domini...

Understanding the Average Impact of Microcredit Expansions: A Bayesian Hierarchical Analysis of Seven Randomized Experiments

By Rachael Meager

American Economic Journal: Applied Economics, January 2019

Despite evidence from multiple randomized evaluations of microcredit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hiera...

Job Search Periods for Welfare Applicants: Evidence from a Randomized Experiment

By Jonneke Bolhaar, Nadine Ketel, and Bas van der Klaauw

American Economic Journal: Applied Economics, January 2019

We combine a randomized experiment with administrative data to study the effects of mandatory job search periods in the Dutch welfare system. Job search periods postpone the first welfare benefits payment and encourage applicants to start searching for jo...

Partners in Crime

By Stephen B. Billings, David J. Deming, and Stephen L. Ross

American Economic Journal: Applied Economics, January 2019

Social interactions may explain the large variance in criminal activity across neighborhoods and time. We present direct evidence of social spillovers in crime using random variation in neighborhood residence along opposite sides of a newly drawn school b...

The Effect of Pollution on Worker Productivity: Evidence from Call Center Workers in China

By Tom Y. Chang, Joshua Graff Zivin, Tal Gross, and Matthew Neidell

American Economic Journal: Applied Economics, January 2019

We investigate the effect of pollution on worker productivity in the service sector by focusing on two call centers in China. Using precise measures of each worker's daily output linked to daily measures of pollution and meteorology, we find that higher l...

Severe Air Pollution and Labor Productivity: Evidence from Industrial Towns in China

By Jiaxiu He, Haoming Liu, and Alberto Salvo

American Economic Journal: Applied Economics, January 2019

We examine day-to-day fluctuations in worker-level output at two manufacturing sites in China. Ambient fine-particle (PM2.5) pollution is severe but significantly variable, largely due to exogenous atmospheric ventilation. We obtain an insignif...

Labor Drops: Experimental Evidence on the Return to Additional Labor in Microenterprises

By Suresh de Mel, David McKenzie, and Christopher Woodruff

American Economic Journal: Applied Economics, January 2019

A field experiment in Sri Lanka provided wage subsidies to randomly chosen microenterprises to test whether hiring additional labor benefits such firms, and whether a short-term subsidy can have a lasting impact on firm employment. Using 12 rounds of surv...

The Welfare Effects of Nudges: A Case Study of Energy Use Social Comparisons

By Hunt Allcott and Judd B. Kessler

American Economic Journal: Applied Economics, January 2019

"Nudge"-style interventions are often deemed successful if they generate large behavior change at low cost, but they are rarely subjected to full social welfare evaluations. We combine a field experiment with a simple theoretical framework to evaluate the...

Financial Incentives as Signals: Experimental Evidence from the Recruitment of Village Promoters in Uganda

By Erika Deserranno

American Economic Journal: Applied Economics, January 2019

I study the role of financial incentives as signals of job characteristics when these are unknown to potential applicants. To this end, I create experimental variation in expected earnings and use that to estimate the effect of financial incentives on c...

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 Journal: Macroeconomics, January 2019

A Model of Secular Stagnation: Theory and Quantitative Evaluation

By Gauti B. Eggertsson, Neil R. Mehrotra, and Jacob A. Robbins

American Economic Journal: Macroeconomics, January 2019

This paper formalizes and quantifies the secular stagnation hypothesis, defined as a persistently low or negative natural rate of interest leading to a chronically binding zero lower bound (ZLB). Output-inflation dynamics and policy prescriptions are fund...

Learning, Career Paths, and the Distribution of Wages

By Santiago Caicedo, Robert E. Lucas Jr., and Esteban Rossi-Hansberg

American Economic Journal: Macroeconomics, January 2019

We develop a theory of career paths and earnings where agents organize in production hierarchies. Agents climb these hierarchies as they learn stochastically from others. Earnings grow as agents acquire knowledge and occupy positions with more subordinate...

Fiscal Austerity in Ambiguous Times

By Axelle Ferriere and Anastasios G. Karantounias

American Economic Journal: Macroeconomics, January 2019

This paper analyzes optimal fiscal policy with ambiguity aversion and endogenous government spending. We show that, without ambiguity, optimal surplus-to-output ratios are acyclical and that there is no rationale for either reduction or further accumulati...

When Is Foreign Exchange Intervention Effective? Evidence from 33 Countries

By Marcel Fratzscher, Oliver Gloede, Lukas Menkhoff, Lucio Sarno, and Tobias Stöhr

American Economic Journal: Macroeconomics, January 2019

This paper examines foreign exchange intervention based on novel daily data covering 33 countries from 1995 to 2011. We find that intervention is widely used and an effective policy tool, with a success rate in excess of 80 percent under some criteria. Th...

Monetary Policy, Real Activity, and Credit Spreads: Evidence from Bayesian Proxy SVARs

By Dario Caldara and Edward Herbst

American Economic Journal: Macroeconomics, January 2019

In this paper we develop a Bayesian framework to estimate a proxy structural vector autoregression to identify monetary policy shocks. We find that during the Great Moderation period, monetary policy shocks induce a persistent decline in real activity and...

Demographic Structure and Macroeconomic Trends

By Yunus Aksoy, Henrique S. Basso, Ron P. Smith, and Tobias Grasl

American Economic Journal: Macroeconomics, January 2019

We estimate the effect of changes in demographic structure on long-term trends of key macroeconomic variables using a Panel VAR for 21 OECD economies from 1970–2014. The panel data variation assists the identification of demographic effects, while t...

The Urban Mortality Transition and Poor-Country Urbanization

By Remi Jedwab and Dietrich Vollrath

American Economic Journal: Macroeconomics, January 2019

Today the world's fastest-growing cities lie in low-income countries, unlike the historical norm. Also unlike the "killer cities" of history, cities in low-income countries grow not just through in-migration but also through their own natural increase. ...

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...