The Social Value of Financial Expertise

By Pablo Kurlat

American Economic Review, February 2019

I study expertise acquisition in a model of trading under asymmetric information. I propose and implement a method to measure r, the ratio of the marginal social value to the marginal private value of expertise. This can be decomposed into three sufficien...

Learning to Coordinate: A Study in Retail Gasoline

By David P. Byrne and Nicolas de Roos

American Economic Review, February 2019

This paper studies equilibrium selection in the retail gasoline industry. We exploit a unique dataset that contains the universe of station-level prices for an urban market for 15 years, and that encompasses a coordinated equilibrium transition mid-sample...

Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior

By Arindrajit Dube, Laura Giuliano, and Jonathan Leonard

American Economic Review, February 2019

We analyze how separations responded to arbitrary differences in own and peer wages at a large US retailer. Regression-discontinuity estimates imply large causal effects of own-wages on separations, and on quits in particular. However, this own-wage respo...

Financing Durable Assets

By Adriano A. Rampini

American Economic Review, February 2019

This paper studies how the durability of assets affects financing. We show that more durable assets require larger down payments making them harder to finance, because durability affects the price of assets and hence the overall financing need more than t...

Optimal Trend Inflation

By Klaus Adam and Henning Weber

American Economic Review, February 2019

Sticky price models featuring heterogeneous firms and systematic firm-level productivity trends deliver radically different predictions for the optimal inflation rate than their popular homogenous-firm counterparts: (i) the optimal steady-state inflation ...

Front Matter

American Economic Journal: Economic Policy, February 2019

Are Consumers Poorly Informed about Fuel Economy? Evidence from Two Experiments

By Hunt Allcott and Christopher Knittel

American Economic Journal: Economic Policy, February 2019

It is often asserted that consumers are poorly informed about and inattentive to fuel economy, causing them to buy low-fuel economy vehicles despite their own best interest. This paper presents evidence on this assertion through two experiments providing ...

Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France

By Youssef Benzarti and Dorian Carloni

American Economic Journal: Economic Policy, February 2019

This paper evaluates the incidence of a large cut in value-added taxes (VATs) for French sit-down restaurants in 2009. In contrast to previous studies, which only focus on the price effects of VAT reforms, we estimate the effects of the VAT cut on four gr...

The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant

By Eric Bettinger, Oded Gurantz, Laura Kawano, Bruce Sacerdote, and Michael Stevens

American Economic Journal: Economic Policy, February 2019

We examine the long-term impacts of California's state-based financial aid by tracking educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA...

Direct and Spillover Effects of Middle School Vaccination Requirements

By Christopher S. Carpenter and Emily C. Lawler

American Economic Journal: Economic Policy, February 2019

We study the direct and spillover effects of state requirements that middle school youths obtain a tetanus, diphtheria, and pertussis (Tdap) booster prior to middle school entry. These mandates significantly increased Tdap vaccine take-up and reduced pert...

Best Prices: Price Discrimination and Consumer Substitution

By Judith A. Chevalier and Anil K. Kashyap

American Economic Journal: Economic Policy, February 2019

This paper proposes a method for aggregating prices when retailers use periodic sales to price-discriminate amongst heterogeneous customers. In the motivating model, loyal customers buy one brand and do not strategically time purchases, while Bargain Hunt...

Judicial Politics and Sentencing Decisions

By Alma Cohen and Crystal S. Yang

American Economic Journal: Economic Policy, February 2019

This paper investigates whether judge political affiliation contributes to racial and gender disparities in sentencing using data on over 500,000 federal defendants linked to sentencing judge. Exploiting random case assignment, we find that Republican-app...

Physician Beliefs and Patient Preferences: A New Look at Regional Variation in Health Care Spending

By David Cutler, Jonathan S. Skinner, Ariel Dora Stern, and David Wennberg

American Economic Journal: Economic Policy, February 2019

There is considerable controversy about the causes of regional variations in health care expenditures. Using vignettes from patient and physician surveys linked to fee-for-service Medicare expenditures, this study asks whether patient demand-side factors ...

Does It Matter if Your Health Insurer Is For Profit? Effects of Ownership on Premiums, Insurance Coverage, and Medical Spending

By Leemore Dafny

American Economic Journal: Economic Policy, February 2019

There is limited empirical evidence about the impact of for-profit health insurers on various outcomes. I study the effects of conversions to for-profit status by Blue Cross and Blue Shield (BCBS) affiliates in 11 states, spanning 28 geographic markets. I...

Effectiveness of Fiscal Incentives for R&D: Quasi-experimental Evidence

By Irem Guceri and Li Liu

American Economic Journal: Economic Policy, February 2019

We exploit a 2008 UK policy reform that increased the tax incentives for R&D in medium-sized enterprises relative to large ones, to overcome the endogeneity of exposure to such tax credits. We estimate a difference-in-difference design on the universe of ...

Stimulating the Vote: ARRA Road Spending and Vote Share

By Emiliano Huet-Vaughn

American Economic Journal: Economic Policy, February 2019

This paper estimates the impact of public good spending on voting behavior in the United States, using a quasi-experimental design and the distribution of American Recovery and Reinvestment Act (ARRA) road projects in New Jersey. I find an approximate 1.5...

The Out-of-State Tuition Distortion

By Brian Knight and Nathan Schiff

American Economic Journal: Economic Policy, February 2019

Public universities typically charge much higher tuition to nonresidents. We first investigate the welfare implications of this tuition gap in a simple model. While the social planner does not distinguish between residents and nonresidents, state governme...

Liquidity Constraint Tightness and Consumer Responses to Fiscal Stimulus Policy

By Claus Thustrup Kreiner, David Dreyer Lassen, and Søren Leth-Petersen

American Economic Journal: Economic Policy, February 2019

The marginal interest rate is the price at which a household can access additional liquidity. Consumption theory posits that variation in marginal interest rates across consumers predicts differences in the propensity to spend a stimulus payment. This hyp...

Patchwork Policies, Spillovers, and the Search for Oil and Gas

By Eric Lewis

American Economic Journal: Economic Policy, February 2019

The United States has a complex patchwork of mineral ownership, where rights to oil and gas may be owned by the federal government, state governments, or private agents. I show why the policies imposed by one owner have theoretically ambiguous spillover e...

An Estimable Model of Income Redistribution in a Federation: Musgrave Meets Oates

By Kevin Milligan and Michael Smart

American Economic Journal: Economic Policy, February 2019

We develop a theory of cross-border income shifting in response to subnational personal taxation in a federation and examine its implications for the excess burden of personal taxes. We show how a properly chosen federal tax rate can offset the fiscal ext...