Beyond Truth-Telling: Preference Estimation with Centralized School Choice and College Admissions

By Gabrielle Fack, Julien Grenet, and Yinghua He

American Economic Review, April 2019

We propose novel approaches to estimating student preferences with data from matching mechanisms, especially the Gale-Shapley deferred acceptance. Even if the mechanism is strategy-proof, assuming that students truthfully rank schools in applications may ...

Subsidizing Health Insurance for Low-Income Adults: Evidence from Massachusetts

By Amy Finkelstein, Nathaniel Hendren, and Mark Shepard

American Economic Review, April 2019

How much are low-income individuals willing to pay for health insurance, and what are the implications for insurance markets? Using administrative data from Massachusetts' subsidized insurance exchange, we exploit discontinuities in the subsidy schedule...

(Mis)Allocation, Market Power, and Global Oil Extraction

By John Asker, Allan Collard-Wexler, and Jan De Loecker

American Economic Review, April 2019

We propose an approach to measuring the misallocation of production in a market that compares actual industry cost curves to undistorted (counterfactual) supply curves. As compared to traditional, TFPR-based, misallocation measures, this approach leverage...

WTO Accession and Performance of Chinese Manufacturing Firms: Corrigendum

By Loren Brandt, Johannes Van Biesebroeck, Luhang Wang, and Yifan Zhang

American Economic Review, April 2019

Front Matter

American Economic Journal: Macroeconomics, April 2019

Housing Constraints and Spatial Misallocation

By Chang-Tai Hsieh and Enrico Moretti

American Economic Journal: Macroeconomics, April 2019

We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply...

Underemployment and the Trickle-Down of Unemployment

By Regis Barnichon and Yanos Zylberberg

American Economic Journal: Macroeconomics, April 2019

A substantial fraction of workers are underemployed, i.e., employed in jobs for which they are overqualified, and that fraction—the underemployment rate—is higher in recessions. To explain these facts, we build a search model with an endogenous "ran...

Natural Resources and Global Misallocation

By Alexander Monge-Naranjo, Juan M. Sánchez, and Raül Santaeulàlia-Llopis

American Economic Journal: Macroeconomics, April 2019

Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we provide a new methodology to estimate output shares of natural resources based solely on current rent flows data. With this...

Capital Flows and Foreign Exchange Intervention

By Paolo Cavallino

American Economic Journal: Macroeconomics, April 2019

I consider a small open economy model where international financial markets are imperfect and the exchange rate is determined by capital flows. I use this framework to study the effects of portfolio flow shocks, derive the optimal foreign exchange interve...

Fixed-Wage Contracts and Monetary Non-neutrality

By Maria Björklund, Mikael Carlsson, and Oskar Nordström Skans

American Economic Journal: Macroeconomics, April 2019

We study the importance of wage rigidities for the monetary policy transmission mechanism. Using uniquely rich micro data on Swedish wage negotiations, we isolate periods when the labor market is covered by fixed-wage contracts. Importantly, negotiations ...

Reconsidering the Consequences of Worker Displacements: Firm versus Worker Perspective

By Aaron Flaaen, Matthew D. Shapiro, and Isaac Sorkin

American Economic Journal: Macroeconomics, April 2019

Prior literature has established that displaced workers suffer persistent earnings losses by following workers in administrative data after mass layoffs. This literature assumes that these are involuntary separations owing to economic distress. This paper...

Failure to Launch: Housing, Debt Overhang, and the Inflation Option

By Aaron Hedlund

American Economic Journal: Macroeconomics, April 2019

Can inflating away nominal mortgage liabilities effectively combat recessions? I address this question using a model of illiquid housing, endogenous credit supply, and equilibrium default. I show that, in an ordinary recession, temporarily raising the inf...

Financing Constraints, Radical versus Incremental Innovation, and Aggregate Productivity

By Andrea Caggese

American Economic Journal: Macroeconomics, April 2019

I provide new empirical evidence on the negative relationship between financial frictions and productivity growth over a firm's life cycle. I show that a model of firm dynamics with incremental innovation cannot explain this evidence. However, further inc...

Product Turnover and the Cost-of-Living Index: Quality versus Fashion Effects

By Kozo Ueda, Kota Watanabe, and Tsutomu Watanabe

American Economic Journal: Macroeconomics, April 2019

This paper evaluates the effects of product turnover on a welfare-based cost-of-living index by incorporating the quality effect and the fashion effect. Employing scanner data for Japan for the years 1988–2013, we find that (i) the price and quantity of...

Changes in Between-Group Inequality: Computers, Occupations, and International Trade

By Ariel Burstein, Eduardo Morales, and Jonathan Vogel

American Economic Journal: Macroeconomics, April 2019

We provide a unifying framework to quantify the impact of several determinants of changes in US between-group inequality. We use an assignment framework with many labor groups, equipment types, and occupations in which changes in inequality are driven by ...

Front Matter

American Economic Journal: Microeconomics, May 2019

The Comparative Statics of Optimal Hierarchies

By Cheng Chen and Wing Suen

American Economic Journal: Microeconomics, May 2019

Several classes of models of hierarchical organizations share two common properties: the characteristics at different levels of the hierarchy are complementary, but this complementarity does not extend beyond adjacent levels. We propose a unified yet simp...

Switching Costs and Competition in Retirement Investment

By Fernando Luco

American Economic Journal: Microeconomics, May 2019

How do different switching costs affect choices and competition in a private pension system? I answer this question in a setting in which variation in employment status allows me to identify two switching costs that jointly affect enrollees' decisions: th...

Strategic Performance of Deferred Acceptance in Dynamic Matching Problems

By John Kennes, Daniel Monte, and Norovsambuu Tumennasan

American Economic Journal: Microeconomics, May 2019

In dynamic matching problems, priorities often depend on previous allocations and create opportunities for manipulations that are absent in static problems. In the dynamic school choice problem, students can manipulate the period-by-period deferred accept...

Multiple Lenders, Strategic Default, and Covenants

By Andrea Attar, Catherine Casamatta, Arnold Chassagnon, and Jean-Paul Décamps

American Economic Journal: Microeconomics, May 2019

We study capital markets in which investors compete by designing financial contracts to control an entrepreneur's ability to side trade and default on multiple loans. We show that covenants may have anticompetitive effects: in particular, they prevent inv...