Vendettas

By Friedel Bolle, Jonathan H. W. Tan, and Daniel John Zizzo

American Economic Journal: Microeconomics, May 2014

Vendettas occur in many real-world settings where rivals compete for a prize, e.g., winning a competitive promotion or retaining a job, by engaging in aggressive, retaliatory behavior. We present a benchmark experiment where two players have an initial ...

Inefficiency Measurement

By Christopher P. Chambers and Alan D. Miller

American Economic Journal: Microeconomics, May 2014

We introduce an ordinal model of efficiency measurement. Our primitive is a notion of efficiency that is comparative, but not cardinal or absolute. In this framework, we postulate axioms that an ordinal efficiency measure should satisfy. Primary among t...

The Impact of Intergovernmental Transfers on Education Outcomes and Poverty Reduction

By Stephan Litschig and Kevin M. Morrison

American Economic Journal: Applied Economics, October 2013

This paper provides regression discontinuity evidence on development impacts of intergovernmental transfers. Extra transfers in Brazil increased local government spending per capita by about 20 percent over a 4 year period with no evidence of crowding ...

When Is a Risky Asset "Urgently Needed"?

By Felix Kubler, Larry Selden, and Xiao Wei

American Economic Journal: Microeconomics, May 2014

Risk free asset demand in the classic portfolio problem is shown to decrease with income if and only if the consumer's uncertainty preferences over assets satisfy the preference condition that the risk free asset is more readily substituted for the ris...

Communication, Renegotiation, and the Scope for Collusion

By David J. Cooper and Kai-Uwe Kühn

American Economic Journal: Microeconomics, May 2014

We study the effect of communication in an experimental game where cooperation is consistent with equilibrium play if players share an understanding that cheating will be punished. Consistent with communication acting as a coordinating device, credible...

Candidates, Character, and Corruption

By B. Douglas Bernheim and Navin Kartik

American Economic Journal: Microeconomics, May 2014

We study the characteristics of self-selected candidates in corrupt political systems. Individuals differ along two dimensions of unobservable character: public spirit (altruism) and honesty (disutility from selling out to special interests). Both aspe...

Intermediate Goods and Weak Links in the Theory of Economic Development

By Charles I. Jones

American Economic Journal: Macroeconomics, April 2011

What explains the enormous differences in incomes across countries? This paper returns to two old ideas: linkages and complementarity. First, linkages between firms through intermediate goods deliver a multiplier similar to the one associated with capita...

The Mystery of the Excess Trade (Balances)

By Donald R. Davis and David E. Weinstein

American Economic Review, May 2002

The Macroeconomics of Child Labor Regulation

By Matthias Doepke and Fabrizio Zilibotti

American Economic Review, December 2005

We develop a positive theory of the adoption of child labor laws. Workers who compete with children in the labor market support a child labor ban, unless their own working children provide a large fraction of family income. Fertility decisions lock agents...

Machine Learning Methods for Demand Estimation

By Patrick Bajari, Denis Nekipelov, Stephen P. Ryan, and Miaoyu Yang

American Economic Review, May 2015

We survey and apply several techniques from the statistical and computer science literature to the problem of demand estimation. To improve out-of-sample prediction accuracy, we propose a method of combining the underlying models via linear regression. Ou...

Output Fluctuations in the United States: What Has Changed since the Early 1980's?

By Margaret M. McConnell and Gabriel Perez-Quiros

American Economic Review, December 2000

High-Dimensional Methods and Inference on Structural and Treatment Effects

[Symposium: Big Data]

By Alexandre Belloni, Victor Chernozhukov, and Christian Hansen

Journal of Economic Perspectives, Spring 2014

Data with a large number of variables relative to the sample size—"high-dimensional data"—are readily available and increasingly common in empirical economics. High-dimensional data arise through a combination of two phenomena. First, the data may be ...

The Effect of Third-Party Funding of Plaintiffs on Settlement

By Andrew F. Daughety and Jennifer F. Reinganum

American Economic Review, August 2014

A significant policy concern about the emerging plaintiff legal funding industry is that loans will undermine settlement. When the plaintiff has private information about damages, we find that the optimal (plaintiff-funder) loan induces all plaintiff type...

Racial Discrimination in Grading: Evidence from Brazil

By Fernando Botelho, Ricardo A. Madeira, and Marcos A. Rangel

American Economic Journal: Applied Economics, October 2015

We investigate whether racial discrimination in the form of biased assessment of students is prevalent within Brazilian schools. Evidence is drawn from unique administrative data pertaining to eighth-grade students and educators. Holding constant perfo...

Evolving Monetary/Fiscal Policy Mix in the United States

By Francesco Bianchi

American Economic Review, May 2012

A micro-founded model that allows for changes in the monetary/fiscal policy mix and in the volatility of structural shocks is fit to US post-WWII data. Agents are aware of the possibility of regime changes and their beliefs have an impact on the law of mo...

The Time-Varying NAIRU and Its Implications for Economic Policy

[Symposium: The Natural Rate of Unemployment]

By Robert J. Gordon

Journal of Economic Perspectives, Winter 1997

The NAIRU, the unemployment rate consistent with a constant rate of inflation, is estimated, in this paper, as a parameter allowed to vary over time. Value is determined in an econometric model where the inflation rate depends on its past values, demand a...

Distorted Gravity: The Intensive and Extensive Margins of International Trade

By Thomas Chaney

American Economic Review, September 2008

By considering a model with identical firms, Krugman (1980) predicts that a higher elasticity of substitution between goods magnifies the impact of trade barriers on trade flows. In this paper, I introduce firm heterogeneity in a simple model of internati...

Information Disclosure as a Matching Mechanism: Theory and Evidence from a Field Experiment

By Steven Tadelis and Florian Zettelmeyer

American Economic Review, February 2015

Market outcomes depend on the quality of information available to its participants. We measure the effect of information disclosure on market outcomes using a large-scale field experiment that randomly discloses quality information in wholesale automob...

Eight Questions about Brain Drain

[Symposium: Emigration]

By John Gibson and David McKenzie

Journal of Economic Perspectives, Summer 2011

The term "brain drain" dominates popular discourse on high-skilled migration, and for this reason, we use it in this article. However, as Harry Johnson noted, it is a loaded phrase implying serious loss. It is far from clear that such a loss actually occu...

The Great Divide and Beyond: Financial Architecture in Transition

[Symposium: Transition Economies]

By Erik Berglof and Patrick Bolton

Journal of Economic Perspectives, Winter 2002

The Great Divide in economic and financial development and the convergence in financial architecture among the successful countries raise fundamental questions about how financial development interacts with economic growth. Is it possible to engineer a de...