Consumption, Income Changes, and Heterogeneity: Evidence from Two Fiscal Stimulus Programs

By Kanishka Misra and Paolo Surico

American Economic Journal: Macroeconomics, October 2014

Almost half of American families did not adjust their consumption following receipt of the 2001 or 2008 tax rebates. Another 20 percent, with low income and more likely to rent, spent a small but significant amount. Households with large spending prope...

Fiscal Policy and MPC Heterogeneity

By Tullio Jappelli and Luigi Pistaferri

American Economic Journal: Macroeconomics, October 2014

We use responses to survey questions in the 2010 Italian Survey of Household Income and Wealth that ask consumers how much of an unexpected transitory income change they would consume. The marginal propensity to consume (MPC) is 48 percent on average. W...

Monetary Policy without Interest Rates: Evidence from France's Golden Age (1948 to 1973) Using a Narrative Approach

By Eric Monnet

American Economic Journal: Macroeconomics, October 2014

Central banking in France from 1948 to 1973 was a paradigmatic example of a policy that relied on quantities rather than interest rates. Standard SVAR analyses support the common view that monetary policy was ineffective during this period. However, th...

Government Spending Multipliers in Developing Countries: Evidence from Lending by Official Creditors

By Aart Kraay

American Economic Journal: Macroeconomics, October 2014

I use a novel loan-level dataset covering lending by official creditors to developing country governments to construct an instrument for government spending. Loans from official creditors typically finance multiyear public spending projects, with disbu...

Medium Term Business Cycles in Developing Countries

By Diego Comin, Norman Loayza, Farooq Pasha, and Luis Serven

American Economic Journal: Macroeconomics, October 2014

We study the transmission of business cycle fluctuations for developed (N ) to developing economies (S ) with a two-country, asymmetric, DSGE model with endogenous development of new technologies in N, and sunk costs of exporting and transferring the p...

Welfare Reversals in a Monetary Union

By Stéphane Auray and Aurélien Eyquem

American Economic Journal: Macroeconomics, October 2014

We show that welfare can be lower under complete financial markets than under autarky in a monetary union with home bias, sticky prices, and asymmetric shocks. Such a monetary union is a second- best environment in which the structure of financial mark...

The Political Economy of the Greek Debt Crisis: A Tale of Two Bailouts

By Silvia Ardagna and Francesco Caselli

American Economic Journal: Macroeconomics, October 2014

We review the events that led to the May 2010 and July 2011 bailout agreements. We interpret the bailouts as outcomes of political-economy equilibria. We argue that these equilibria were likely not on the Pareto frontier, and sketch political-economy a...

Front Matter

American Economic Journal: Macroeconomics, October 2014

A Test of Racial Bias in Capital Sentencing

By Alberto Alesina and Eliana La Ferrara

American Economic Review, November 2014

We collect a new dataset on capital punishment in the US and we propose a test of racial bias based upon patterns of sentence reversals. We model the courts as minimizing type I and II errors. If trial courts were unbiased, conditional on defendants race...

On the Selection of Arbitrators

By Geoffroy de Clippel, Kfir Eliaz, and Brian Knight

American Economic Review, November 2014

A key feature of arbitration is the possibility for conflicting parties to participate in the selection of the arbitrator, the individual who will rule the case. We analyze this problem of the selection of arbitrators from the perspective of implementatio...

Asset Demand Based Tests of Expected Utility Maximization

By Felix Kubler, Larry Selden, and Xiao Wei

American Economic Review, November 2014

We provide conditions under which contingent claim and asset demands are consistent with state independent Expected Utility maximization. The paper focuses on the case of a single commodity and demands are allowed to be functions of probabilities and not ...

A Biological Theory of Social Discounting

By Arthur J. Robson and Balázs Szentes

American Economic Review, November 2014

We consider a growth model in which intergenerational transfers are made via stocks of private and public capital. Private capital is the outcome of individuals' private savings while decisions regarding public capital are made collectively. We hypothes...

Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices

By Daniel J. Benjamin, Ori Heffetz, Miles S. Kimball, and Alex Rees-Jones

American Economic Review, November 2014

We survey 561 students from U.S. medical schools shortly after they submit choice rankings over residencies to the National Resident Matching Program. We elicit (a) these choice rankings, (b) anticipated subjective well-being (SWB) rankings, and (c) expec...

Mismatch Unemployment

By Ayşegül Şahin, Joseph Song, Giorgio Topa, and Giovanni L. Violante

American Economic Review, November 2014

We develop a framework where mismatch between vacancies and job seekers across sectors translates into higher unemployment by lowering the aggregate job-finding rate. We use this framework to measure the contribution of mismatch to the recent rise in U.S....

Inefficient Hiring in Entry-Level Labor Markets

By Amanda Pallais

American Economic Review, November 2014

Hiring inexperienced workers generates information about their abilities. If this information is public, workers obtain its benefits. If workers cannot compensate firms for hiring them, firms will hire too few inexperienced workers. I determine the effect...

The Network Structure of International Trade

By Thomas Chaney

American Economic Review, November 2014

Motivated by empirical evidence I uncover on the dynamics of French firms exports, I offer a novel theory of trade frictions. Firms only export into markets where they have a contact. They directly search for new trading partners, but also use their ex...

Structural Transformation, the Mismeasurement of Productivity Growth, and the Cost Disease of Services

By Alwyn Young

American Economic Review, November 2014

If workers self-select into industries based upon their relative productivity in different tasks, and comparative advantage is aligned with absolute advantage, then the average efficacy of a sector's workforce will be negatively correlated with its emp...

A Quantitative Analysis of the Used-Car Market

By Alessandro Gavazza, Alessandro Lizzeri, and Nikita Roketskiy

American Economic Review, November 2014

We quantitatively investigate the allocative and welfare effects of secondary markets for cars. An important source of gains from trade in these markets is the heterogeneity in the willingness to pay for higher-quality (newer) goods, but transaction co...

Fertility Transitions along the Extensive and Intensive Margins

By Daniel Aaronson, Fabian Lange, and Bhashkar Mazumder

American Economic Review, November 2014

By allowing for an extensive margin in the standard quantity-quality model, we generate new insights into fertility transitions. We test the model on Southern black women aected by a large-scale school construction program. Consistent with our model, wom...

Claim Validation

By Nabil Al-Najjar, Luciano Pomatto, and Alvaro Sandroni

American Economic Review, November 2014

Hume (1748) challenged the idea that a general claim (e.g. "all swans are white") can be validated by empirical evidence, no matter how compelling. We examine this issue from the perspective of a tester who must accept or reject the forecasts of a potent...