Bounded-Rationality Models: Tasks to Become Intellectually Competitive

By Ronald M. Harstad and Reinhard Selten

Journal of Economic Literature, June 2013

Research in experimental economics has cogently challenged the fundamental precept of neoclassical economics that economic agents optimize. The last two decades have seen elaboration of boundedly rational models that try to move away from the optimizati...

Boundedly Rational versus Optimization-Based Models of Strategic Thinking and Learning in Games

By Vincent P. Crawford

Journal of Economic Literature, June 2013

Harstad and Selten's article in this forum performs a valuable service by highlighting the dominance of optimization-based models over boundedly rational models in modern microeconomics, and questioning whether optimization-based models are a better wa...

Incorporating Limited Rationality into Economics

By Matthew Rabin

Journal of Economic Literature, June 2013

Harstad and Selten (this forum) raise interesting questions about the relative promise of optimization models and bounded-rationality models in making progress in economics. This article builds from their analysis by indicating the potential for using n...

Book Reviews

Journal of Economic Literature, June 2013

Front Matter

Journal of Economic Literature, June 2013

Annotated Listing of New Books

Journal of Economic Literature, June 2013

JEL Classification System

Journal of Economic Literature, June 2013

Credit Risk and Disaster Risk

By François Gourio

American Economic Journal: Macroeconomics, July 2013

Credit spreads are large, volatile, and countercyclical, and recent empirical work suggests that risk premia, not expected credit losses, are responsible for these features. Building on the idea that corporate debt, while fairly safe in ordinary recess...

Crises and Recoveries in an Empirical Model of Consumption Disasters

By Emi Nakamura, Jón Steinsson, Robert Barro, and José Ursúa

American Economic Journal: Macroeconomics, July 2013

We estimate an empirical model of consumption disasters using new data on consumption for 24 countries over more than 100 years, and study its implications for asset prices. The model allows for partial recoveries after disasters that unfold over multi...

The Financial Crisis: Lessons for International Macroeconomics

By Matthieu Bussière, Jean Imbs, Robert Kollmann, and Romain Rancière

American Economic Journal: Macroeconomics, July 2013

This article introduces a special section of the American Economic Journal: Macroeconomics, containing five papers presented during a conference in Paris in October 2011. The aim of the conference was to derive lessons from the financial crisis, for re...

Sovereign Defaults: The Price of Haircuts

By Juan J. Cruces and Christoph Trebesch

American Economic Journal: Macroeconomics, July 2013

A main puzzle in the sovereign debt literature is that defaults have only minor effects on subsequent borrowing costs and access to credit. This paper comes to a different conclusion. We construct the first complete database of investor losses ("haircu...

Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009

By Matthieu Bussière, Giovanni Callegari, Fabio Ghironi, Giulia Sestieri, and Norihiko Yamano

American Economic Journal: Macroeconomics, July 2013

This paper introduces a new empirical model of international trade flows based on an import intensity-adjusted measure of aggregate demand. We compute the import intensity of demand components by using the OECD Input-Output tables. We argue that the co...

International Contagion through Leveraged Financial Institutions

By Eric van Wincoop

American Economic Journal: Macroeconomics, July 2013

The 2008–2009 financial crises, while originating in the United States, witnessed a drop in asset prices and output that was at least as large in the rest of the world. We investigate, in the context of a simple two-country model, whether this could ...

Sharing the Burden: Monetary and Fiscal Responses to a World Liquidity Trap

By David Cook and Michael B. Devereux

American Economic Journal: Macroeconomics, July 2013

This paper analyzes optimal policy responses to a global liquidity trap. The key feature of this environment is that relative prices respond perversely. A fall in demand in one country causes an appreciation of its terms of trade, exacerbating the initia...

Capital Controls with International Reserve Accumulation: Can This Be Optimal?

By Philippe Bacchetta, Kenza Benhima, and Yannick Kalantzis

American Economic Journal: Macroeconomics, July 2013

Motivated by the Chinese experience, we analyze an economy where the central bank has access to international capital markets, but the private sector does not. The central bank is modeled as a Ramsey planner who can choose the domestic interest rate an...

Front Matter

American Economic Journal: Macroeconomics, July 2013

Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior

By Mark R. Jacobsen

American Economic Journal: Applied Economics, July 2013

Fuel economy standards change the composition of the vehicle fleet, influencing accident safety. The direction and size of the effect depend on the combination of vehicles in the fleet. I provide empirical estimates of vehicle safety across classes, ac...

Bringing Education to Afghan Girls: A Randomized Controlled Trial of Village-Based Schools

By Dana Burde and Leigh L. Linden

American Economic Journal: Applied Economics, July 2013

We conduct a randomized evaluation of the effect of village-based schools on children's academic performance using a sample of 31 villages and 1,490 children in rural northwestern Afghanistan. The program significantly increases enrollment and test sco...

The Effects of "Girl-Friendly" Schools: Evidence from the BRIGHT School Construction Program in Burkina Faso

By Harounan Kazianga, Dan Levy, Leigh L. Linden, and Matt Sloan

American Economic Journal: Applied Economics, July 2013

We evaluate a 'girl-friendly' primary school program in Burkina Faso using a regression discontinuity design. After 2.5 years, the program increased enrollment by 19 percentage points and increased test scores by 0.41 standard deviations. For those cau...

How Does the Market Use Citation Data? The Hirsch Index in Economics

By Glenn Ellison

American Economic Journal: Applied Economics, July 2013

A large literature following Hirsch (2005) has proposed citation- based indexes of individuals' research output. This paper views Hirsch's index as one member of a larger class and examines how well different indexes align with labor market outcomes f...