Fraudulent Claims and Nitpicky Insurers

By Jean-Marc Bourgeon and Pierre Picard

American Economic Review, September 2014

Insurers have the reputation of being bad payers who nitpick when- ever an opportunity arises. However, this nitpicking activity has a positive impact on their auditing strategy since auditing may prove profitable when claims are not fraudulent. We show t...

Multiproduct Search and the Joint Search Effect

By Jidong Zhou

American Economic Review, September 2014

This paper presents a sequential search model where consumers look for several products from multiproduct firms. Multiproduct search can significantly influence firms' pricing decisions. For example, it can make market prices decrease with search costs. P...

Front Matter

American Economic Review, September 2014

The Macroeconomics of Trend Inflation

By Guido Ascari and Argia M. Sbordone

Journal of Economic Literature, September 2014

Most macroeconomic models for monetary policy analysis are approximated around a zero inflation steady state, but most central banks target an inflation rate of about 2 percent. Many economists have recently proposed even higher inflation targets to reduc...

What Do We Learn from the Weather? The New Climate-Economy Literature

By Melissa Dell, Benjamin F. Jones, and Benjamin A. Olken

Journal of Economic Literature, September 2014

A rapidly growing body of research applies panel methods to examine how temperature, precipitation, and windstorms influence economic outcomes. These studies focus on changes in weather realizations over time within a given spatial area and demonstrate im...

Review Essay on Charles F. Manski's Public Policy in an Uncertain World: Analysis and Decisions

By John Geweke

Journal of Economic Literature, September 2014

Public policy setting often involves quantitative choices with quantitative outcomes. Yet unqualified statements about the precise consequences of alternative choices characterize much of the policy analysis bearing on these decisions. Public Policy i...

The New Science of Cities by Michael Batty: The Opinion of an Economist

By Jacques-Francois Thisse

Journal of Economic Literature, September 2014

Cities are the cradle of a wide range of cultural, social, and technological innovations that are at the heart of modern economic growth and development. Half of humanity today lives in cities but, until the last two decades, economists have paid much les...

The Limits of Inference with Theory: A Review of Wolpin (2013)

By John Rust

Journal of Economic Literature, September 2014

This essay reviews Kenneth I. Wolpin's (2013) monograph The Limits of Inference without Theory, which arose from lectures he presented at the Cowles Foundation in 2010 in honor of Tjalling Koopmans. While I readily agree with Wolpin's basic premise that e...

Book Reviews

Journal of Economic Literature, September 2014

Front Matter

Journal of Economic Literature, September 2014

Annotated Listing of New Books

Journal of Economic Literature, September 2014

JEL Classification System

Journal of Economic Literature, September 2014

Mandatory versus Discretionary Spending: The Status Quo Effect

By T. Renee Bowen, Ying Chen, and Hülya Eraslan

American Economic Review, October 2014

Do mandatory spending programs such as Medicare improve efficiency? We analyze a model with two parties allocating a fixed budget to a public good and private transfers each period over an infinite horizon. We compare two institutions that differ in wheth...

Behavioral Implementation

By Geoffroy de Clippel

American Economic Review, October 2014

Implementation theory assumes that participants' choices are rational, in the sense of being consistent with the maximization of a context- independent preference. The paper investigates implementation under complete information when individuals' choi...

The Short-Run and Long-Run Effects of Behavioral Interventions: Experimental Evidence from Energy Conservation

By Hunt Allcott and Todd Rogers

American Economic Review, October 2014

We document three remarkable features of the Opower program, in which social comparison-based home energy reports are repeatedly mailed to more than six million households nationwide. First, initial reports cause high-frequency "action and backsliding,...

Environmental Regulations, Air and Water Pollution, and Infant Mortality in India

By Michael Greenstone and Rema Hanna

American Economic Review, October 2014

Using the most comprehensive developing country dataset ever compiled on air and water pollution and environmental regulations, the paper assesses India's environmental regulations with a difference-in-differences design. The air pollution regulations ...

Competition and Ideological Diversity: Historical Evidence from US Newspapers

By Matthew Gentzkow, Jesse M. Shapiro, and Michael Sinkinson

American Economic Review, October 2014

We study the competitive forces which shaped ideological diversity in the US press in the early twentieth century. We find that households preferred like-minded news and that newspapers used their political orientation to differentiate from competitors...

Financial Networks and Contagion

By Matthew Elliott, Benjamin Golub, and Matthew O. Jackson

American Economic Review, October 2014

We study cascades of failures in a network of interdependent financial organizations: how discontinuous changes in asset values (e.g., defaults and shutdowns) trigger further failures, and how this depends on network structure. Integration (greater dep...

Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates

By Eric T. Swanson and John C. Williams

American Economic Review, October 2014

According to standard macroeconomic models, the zero lower bound greatly reduces the effectiveness of monetary policy and increases the efficacy of fiscal policy. However, private-sector decisions depend on the entire path of expected future short-term...

Productivity Losses from Financial Frictions: Can Self-Financing Undo Capital Misallocation?

By Benjamin Moll

American Economic Review, October 2014

I develop a highly tractable general equilibrium model in which heterogeneous producers face collateral constraints, and study the effect of financial frictions on capital misallocation and aggregate productivity. My economy is isomorphic to a Solow mo...