Front Matter

American Economic Journal: Macroeconomics, April 2022

High Marginal Tax Rates on the Top 1 Percent? Lessons from a Life-Cycle Model with Idiosyncratic Income Risk

By Fabian Kindermann and Dirk Krueger

American Economic Journal: Macroeconomics, April 2022

This paper argues that high marginal labor income tax rates on top earners are an effective tool for social insurance even when households have high labor supply elasticity, households make dynamic savings decisions, and policies have general equilibrium ...

Credit Spreads, Financial Crises, and Macroprudential Policy

By Ozge Akinci and Albert Queralto

American Economic Journal: Macroeconomics, April 2022

Credit spreads display occasional spikes and are more strongly countercyclical in times of elevated financial stress. Financial crises are extreme cases of this nonlinear behavior, featuring skyrocketing credit spreads, sharp losses in bank equity, and de...

Income Differences, Productivity, and Input-Output Networks

By Harald Fadinger, Christian Ghiglino, and Mariya Teteryatnikova

American Economic Journal: Macroeconomics, April 2022

We study the importance of input-output (IO) linkages and sectoral productivity (TFP) in determining cross-country income differences. We find that while highly connected sectors are more productive than the typical sector in poor countries, the opposite ...

Optimal Currency Areas with Labor Market Frictions

By Rohan Kekre

American Economic Journal: Macroeconomics, April 2022

I study efficiency and optimal monetary policy in a two-country monetary union with frictional labor markets. With heterogeneity in labor market frictions, the constrained efficient allocation generically cannot be achieved even if productivity shocks aff...

Skewed Idiosyncratic Income Risk over the Business Cycle: Sources and Insurance

By Christopher Busch, David Domeij, Fatih Guvenen, and Rocio Madera

American Economic Journal: Macroeconomics, April 2022

We provide new evidence on business cycle fluctuations in skewed labor income risk in the United States, Germany, Sweden, and France. We document four results. First, in all countries, the skewness of individual income growth is strongly procyclical, wher...

Sectoral Heterogeneity and Monetary Policy

By Jonathan Kreamer

American Economic Journal: Macroeconomics, April 2022

Since sectors differ in their sensitivity to interest rates, monetary policy produces inefficient sectoral fluctuations. In a model with sectoral heterogeneity, I show that policymakers should weight sectors proportionally to their interest elasticities, ...

Does Consumption Respond to Transitory Shocks? Reconciling Natural Experiments and Semistructural Methods

By Jeanne Commault

American Economic Journal: Macroeconomics, April 2022

Studies based on natural experiments find that consumption responds strongly and significantly to a transitory variation in income, while semistructural estimations find no pass-through of transitory shocks to consumption. I develop a more robust semistru...

A Theory of Structural Change That Can Fit the Data

By Simon Alder, Timo Boppart, and Andreas Müller

American Economic Journal: Macroeconomics, April 2022

We study structural change in the historical consumption expenditure of the United States, the United Kingdom, Canada, and Australia over more than a century. We characterize the most general class of preferences in a time-additive setting that admits agg...

Pigouvian Cycles

By Renato Faccini and Leonardo Melosi

American Economic Journal: Macroeconomics, April 2022

Current and expected unemployment rates contain information that is highly useful to estimate the effect of news about TFP and to allow a general equilibrium rational expectations model to generate Pigouvian cycles: a large fraction of the comovement of o...

Asset Price Booms and Macroeconomic Policy: A Risk-Shifting Approach

By Franklin Allen, Gadi Barlevy, and Douglas Gale

American Economic Journal: Macroeconomics, April 2022

This paper uses a risk-shifting model to analyze policy responses to asset price booms. We show risk shifting leads to inefficient asset and credit booms in which asset prices can exceed fundamentals. However, the inefficiencies associated with risk shift...

Entry Barriers, Idiosyncratic Distortions, and the Firm Size Distribution

By Roberto N. Fattal-Jaef

American Economic Journal: Macroeconomics, April 2022

This paper studies the interaction between barriers to firm entry and distortions to allocative efficiency in a standard model of firm dynamics. We derive a strategy to infer entry barriers based on cross-country differences in the firm size distribution ...

AEA Member Announcements: Extended Submission deadline for AEA 2023 meetings

[News]

April 01, 2022

View the Member Announcement from April 4, 2022.

The great reset?

[Research Highlight]

March 18, 2022

Guido Alfani discusses how historical pandemics affected wealth gaps between rich and poor.

Call for Papers in Spatial Macroeconomics

[News]

April 04, 2022

The deadline for submission of abstracts is June 15, 2022.

2021 Continuing Education Webcasts

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The Little Divergence

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What was the economic impact of the Black Death in Europe?

Digging into an argument

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Do people become more convinced of their own positions in the midst of a debate?

Understanding the Average Impact of Microcredit Expansions: A Bayesian Hierarchical Analysis of Seven Randomized Experiments

By Rachael Meager

American Economic Journal: Applied Economics, January 2019

Despite evidence from multiple randomized evaluations of microcredit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hiera...

Higher Taxes at the Top: The Role of Entrepreneurs

By Bettina Brüggemann

American Economic Journal: Macroeconomics, July 2021

This paper computes optimal top marginal tax rates in Bewley-Huggett-Aiyagari–type economies that include entrepreneurs. Consistent with the data, entrepreneurs are overrepresented at the top of the income distribution and are thus disproportionately af...