President's Foreword

By Claudia Goldin

American Economic Review, May 2013

Editor's Introduction

By William R. Johnson and Samantha Bennett

American Economic Review, May 2013

A Nation of Gamblers: Real Estate Speculation and American History

By Edward L. Glaeser

American Economic Review, May 2013

The great housing convulsion that buffeted America between 2000 and 2010 has historical precedents, from the frontier land boom of the 1790s to the skyscraper craze of the 1920s. But this time was different. There was far less real uncertainty about funda...

Glass-Steagall: A Requiem

By Robert E. Lucas Jr.

American Economic Review, May 2013

This paper is a discussion of monetary efficiency, monetary safety, and the relation of the 1933 Glass-Steagall Act to both. It contains speculation about whether a modified version of the Act could have postponed or prevented the crisis of 2008.

Shifting Mandates: The Federal Reserve's First Centennial

By Carmen M. Reinhart and Kenneth S. Rogoff

American Economic Review, May 2013

The Federal Reserve's mandate has evolved considerably over the organization's hundred-year history. It was changed from an initial focus in 1913 on financial stability, to fiscal financing in World War II and its aftermath, to a strong anti-inflation foc...

The Most Dangerous Idea in Federal Reserve History: Monetary Policy Doesn't Matter

By Christina D. Romer and David H. Romer

American Economic Review, May 2013

Monetary policy-makers' beliefs about how the economy functions are a key determinant of the conduct of policy. That monetary policy has little impact under the prevailing circumstances is a belief which has resurfaced periodically over the Federal Reserv...

Not Just the Great Contraction: Friedman and Schwartz's A Monetary History of the United States 1867 to 1960

By Michael D. Bordo and Hugh Rockoff

American Economic Review, May 2013

Milton Friedman and Anna J. Schwartz published A Monetary History of the United States: 1867 to 1960 with Princeton University Press in 1963, to critical acclaim. Since then the book's reputation has grown and it clearly has become one of the most influen...

The Missing Transmission Mechanism in the Monetary Explanation of the Great Depression

By Christina D. Romer and David H. Romer

American Economic Review, May 2013

This paper examines the missing transmission mechanism in Friedman's and Schwartz's monetary explanation of the Great Depression. We review the challenge provided by the decline in nominal interest rates in the early 1930s, and show that the monetary expl...

Shadowy Banks and Financial Contagion during the Great Depression: A Retrospective on Friedman and Schwartz

By Kris James Mitchener and Gary Richardson

American Economic Review, May 2013

This essay assesses whether network linkages within the banking system amplified the real effects of bank failures during the Great Contraction. In 1929, nearly all interbank deposits held by Federal Reserve member banks belonged to "shadowy" nonmember ba...

Married to Intolerance: Attitudes toward Intermarriage in Germany, 1900-2006

By Nico Voigtländer and Hans-Joachim Voth

American Economic Review, May 2013

We analyze under what conditions intermarriage can be used as an indicator of tolerance, and whether such tolerant attitudes persisted in Germany during the twentieth century. We find strong evidence for the persistence of tolerant attitudes towards inter...

The Transmission of Democracy: From the Village to the Nation-State

By Paola Giuliano and Nathan Nunn

American Economic Review, May 2013

We provide evidence that a tradition of village democracy is associated with the presence of national democracy today. We also show that a tradition of local democracy is associated with attitudes which are more supportive of democracy, with better qualit...

The Persistence of Inferior Cultural-Institutional Conventions

By Marianna Belloc and Samuel Bowles

American Economic Review, May 2013

Our theory of cultural-institutional persistence and innovation is based on uncoordinated updating of individual social norms and contracts, so that both culture and institutions co-evolve. We explain why Pareto-dominated cultural-institutional configurat...

Cyclical Variation in Labor Hours and Productivity Using the ATUS

By Michael C. Burda, Daniel S. Hamermesh, and Jay Stewart

American Economic Review, May 2013

We examine monthly variation in weekly work hours using data from 2003 to 2010. The data sources include the Current Population Survey (CPS) on hours/worker, the Current Employment Survey (CES) on hours/job, and the American Time Use Survey (ATUS) on both...

Comparisons of Weekly Hours over the Past Century and the Importance of Work-Sharing Policies in the 1930s

By Todd C. Neumann, Jason E. Taylor, and Price Fishback

American Economic Review, May 2013

Changes in the work week drove a larger portion of changes in total labor input during the Great Depression of the 1930s than during other decades. Work-sharing policies appear to be responsible. Herbert Hoover created various work-sharing committees--led...

The Life-Cycle Profile of Time Spent on Job Search

By Mark Aguiar, Erik Hurst, and Loukas Karabarbounis

American Economic Review, May 2013

Using time use survey data we document a hump-shaped profile of job search time in the United States across the life-cycle. The middle-aged unemployed spend roughly three times as much time in job search as the youngest group of unemployed. The hump-shape...

Growth Forecast Errors and Fiscal Multipliers

By Olivier J. Blanchard and Daniel Leigh

American Economic Review, May 2013

This paper investigates the relation between growth forecast errors and planned fiscal consolidation during the crisis. We find that, in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected. The re...

Using State Pension Shocks to Estimate Fiscal Multipliers since the Great Recession

By Daniel Shoag

American Economic Review, May 2013

Has government spending raised income and employment since 2008? I use new data on state pension returns during the Great Recession to recover exogenous changes in spending. Instrumenting with these return shocks, I estimate that each dollar of windfall-f...

How Much Would US Style Fiscal Integration Buffer European Unemployment and Income Shocks? (A Comparative Empirical Analysis)

By James Feyrer and Bruce Sacerdote

American Economic Review, May 2013

We examine the degree to which federal fiscal integration smoothes income and unemployment shocks across US States. We find that roughly 25 cents of every dollar of income shock at the state level is offset by federal fiscal policy. This stabilization com...

Are Government Spending Multipliers Greater during Periods of Slack? Evidence from Twentieth-Century Historical Data

By Michael T. Owyang, Valerie A. Ramey, and Sarah Zubairy

American Economic Review, May 2013

A key question that has arisen during recent debates is whether government spending multipliers are larger during times when resources are idle. This paper seeks to shed light on this question by analyzing new quarterly historical data covering multiple l...

The Mystique Surrounding the Central Bank's Balance Sheet, Applied to the European Crisis

By Ricardo Reis

American Economic Review, May 2013

A central bank's resource constraint bounds the dividends it can distribute by the present value of seignorage, which is a modest share of GDP. This is in spite of the mystique behind a central bank's balance sheet. Moreover, the statutes of the Federal R...