Notes and Errata

Journal of Economic Perspectives, Summer 2013

Environment, Health, and Human Capital

By Joshua Graff Zivin and Matthew Neidell

Journal of Economic Literature, September 2013

In this review, we discuss three major contributions economists have made to our understanding of the relationship between the environment and individual well-being. First, in explicitly recognizing how optimizing behavior, particularly in the form of ...

Understanding China's Urban Pollution Dynamics

By Siqi Zheng and Matthew E. Kahn

Journal of Economic Literature, September 2013

China's ongoing urban economic growth has sharply increased the population's per capita income, lowered the count of people living below the poverty line, and caused major environmental problems. We survey the growing literature investigating the cause...

On the Performance of the U.S. Transportation System: Caution Ahead

By Clifford Winston

Journal of Economic Literature, September 2013

Transportation is a vital sector of the U.S. economy based on consumers', firms', and government's enormous expenditures in money and time and on its effect on virtually all other sectors in the economy. I assess the performance of the transportation sy...

A Review of Enrico Moretti's The New Geography of Jobs

By Edward Glaeser

Journal of Economic Literature, September 2013

Why is prosperity distributed so unevenly across America's metropolitan areas? While population growth has gone disproportionately towards the Sunbelt, high-skill areas have experienced the strongest income growth since 1970. Gaps between more and less...

The Structure of Economic Modeling of the Potential Impacts of Climate Change: Grafting Gross Underestimation of Risk onto Already Narrow Science Models

By Nicholas Stern

Journal of Economic Literature, September 2013

Scientists describe the scale of the risks from unmanaged climate change as potentially immense. However, the scientific models, because they omit key factors that are hard to capture precisely, appear to substantially underestimate these risks. Many ec...

Climate Change Policy: What Do the Models Tell Us?

By Robert S. Pindyck

Journal of Economic Literature, September 2013

Very little. A plethora of integrated assessment models (IAMs) have been constructed and used to estimate the social cost of carbon (SCC) and evaluate alternative abatement policies. These models have crucial flaws that make them close to useless as to...

Tail-Hedge Discounting and the Social Cost of Carbon

By Martin L. Weitzman

Journal of Economic Literature, September 2013

The choice of an overall discount rate for climate change investments depends critically on how different components of investment payoffs are discounted at differing rates reflecting their underlying risk characteristics. Such underlying rates can vary...

Book Reviews

Journal of Economic Literature, September 2013

Annotated Listing of New Books

Journal of Economic Literature, September 2013

JEL Classification System

Journal of Economic Literature, September 2013

Front Matter

Journal of Economic Literature, September 2013

Including: "In Memoriam: Mary Kay Akerman"

Time-Varying Effects of Oil Supply Shocks on the US Economy

By Christiane Baumeister and Gert Peersman

American Economic Journal: Macroeconomics, October 2013

Using time-varying BVARs, we find a substantial decline in the shortrun price elasticity of oil demand since the mid-1980s. This finding helps explain why an oil production shortfall of the same magnitude is associated with a stronger response of oil p...

Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model

By Rüdiger Bachmann, Ricardo J. Caballero, and Eduardo M. R. A. Engel

American Economic Journal: Macroeconomics, October 2013

The sensitivity of US aggregate investment to shocks is procyclical. The response upon impact increases by approximately 50 percent from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lum...

Safety Traps

By Kenza Benhima and Baptiste Massenot

American Economic Journal: Macroeconomics, October 2013

Fear of risk provides a rationale for protracted economic downturns. We develop a real business cycle model where investors with decreasing relative risk aversion choose between a risky and a safe technology that exhibit decreasing returns. Because of ...

The Wrong Shape of Insurance? What Cross-Sectional Distributions Tell Us about Models of Consumption Smoothing

By Tobias Broer

American Economic Journal: Macroeconomics, October 2013

This paper shows how two standard models of consumption risk-sharing—self-insurance through borrowing and saving and limited commitment to insurance contracts—replicate similarly well the standard, second-moment measures of insurance observed in US...

A Pitfall with Estimated DSGE-Based Government Spending Multipliers

By Patrick Fève, Julien Matheron, and Jean-Guillaume Sahuc

American Economic Journal: Macroeconomics, October 2013

This paper examines issues related to the estimation of the government spending multiplier (GSM) in a DSGE context. We stress a source of bias in the GSM arising from the combination of endogenous government expenditures and Edgeworth complementarity ...

Democracy and Reforms: Evidence from a New Dataset

By Paola Giuliano, Prachi Mishra, and Antonio Spilimbergo

American Economic Journal: Macroeconomics, October 2013

Empirical evidence on the relationship between democracy and economic reforms is limited to few reforms, countries, and years. This paper studies the effect of democracy on the adoption of economic reforms using a new dataset on reforms in the financia...

Weak States and Steady States: The Dynamics of Fiscal Capacity

By Timothy Besley, Ethan Ilzetzki, and Torsten Persson

American Economic Journal: Macroeconomics, October 2013

Investments in fiscal capacity—economic institutions for tax compliance—are an important feature of economic development. This paper develops a dynamic model to study the evolution of fiscal capacity over time. We contrast a social planner's investm...

Front Matter

American Economic Journal: Macroeconomics, October 2013