Front Matter

American Economic Journal: Economic Policy, February 2016

The Politics of Compromise

By Alessandro Bonatti and Heikki Rantakari

American Economic Review, February 2016

An organization must select among competing projects that differ in their payoff consequences for its members. Each agent chooses a project and exerts effort affecting its completion time. When one or more projects are complete, the agents select which on...

Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday

By Leandro S. Carvalho, Stephan Meier, and Stephanie W. Wang

American Economic Review, February 2016

We study the effect of financial resources on decision-making. Low-income US households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal cho...

On Communication and Collusion

By Yu Awaya and Vijay Krishna

American Economic Review, February 2016

We study the role of communication within a cartel. Our analysis is carried out in Stigler's (1964) model of repeated oligopoly with secret price cuts. Firms observe neither the prices nor the sales of their rivals. For a fixed discount factor, we identif...

Anatomy of a Contract Change

By Rajshri Jayaraman, Debraj Ray, and Francis de Véricourt

American Economic Review, February 2016

We study a contract change for tea pluckers on an Indian plantation, with a higher government-stipulated baseline wage. Incentive piece rates were lowered or kept unchanged. Yet, in the following month, output increased by 20 to 80 percent. This response ...

Redistribution and Social Insurance

By Mikhail Golosov, Maxim Troshkin, and Aleh Tsyvinski

American Economic Review, February 2016

We study optimal redistribution and insurance in a life-cycle economy with private idiosyncratic shocks. We characterize Pareto optima, show the forces determining optimal labor distortions, and derive closed form expressions for their limiting behavior. ...

Consumption Inequality and Family Labor Supply

By Richard Blundell, Luigi Pistaferri, and Itay Saporta-Eksten

American Economic Review, February 2016

We examine the link between wage and consumption inequality using a life-cycle model incorporating consumption and family labor supply decisions. We derive analytical expressions for the dynamics of consumption, hours, and earnings of two earners in the p...

Exchange Rates, Interest Rates, and the Risk Premium

By Charles Engel

American Economic Review, February 2016

The uncovered interest parity puzzle concerns the empirical regularity that high interest rate countries tend to have high expected returns on short term deposits. A separate puzzle is that high real interest rate countries tend to have currencies that ar...

The Housing Market Impacts of Shale Gas Development: Corrigendum

By Lucija Muehlenbachs, Elisheba Spiller, and Christopher Timmins

American Economic Review, February 2016

Just Luck: An Experimental Study of Risk-Taking and Fairness: Erratum

By Alexander W. Cappelen, James Konow, Erik Ø. Sørensen, and Bertil Tungodden

American Economic Review, February 2016

Front Matter

American Economic Review, February 2016

The International Monetary Fund: 70 Years of Reinvention

[Symposium: The Bretton Woods Institutions]

By Carmen M. Reinhart and Christoph Trebesch

Journal of Economic Perspectives, Winter 2016

A sketch of the International Monetary Fund's 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a "demand driven" theory of institutional change, as the needs o...

The IMF's Unmet Challenges

[Symposium: The Bretton Woods Institutions]

By Barry Eichengreen and Ngaire Woods

Journal of Economic Perspectives, Winter 2016

The International Monetary Fund is a controversial institution whose interventions regularly provoke passionate reactions. We will argue that there is an important role for the IMF in helping to solve information, commitment, and coordination problems wit...

The New Role for the World Bank

[Symposium: The Bretton Woods Institutions]

By Michael A. Clemens and Michael Kremer

Journal of Economic Perspectives, Winter 2016

The World Bank was founded to address what we would today call imperfections in international capital markets. Its founders thought that countries would borrow from the Bank temporarily until they grew enough to borrow commercially. Some critiques and ana...

The World Bank: Why It Is Still Needed and Why It Still Disappoints

[Symposium: The Bretton Woods Institutions]

By Martin Ravallion

Journal of Economic Perspectives, Winter 2016

Does the World Bank still have an important role to play? How might it fulfill that role? The paper begins with a brief account of how the Bank works. It then argues that, while the Bank is no longer the primary conduit for capital from high-income to low...

The World Trade Organization and the Future of Multilateralism

[Symposium: The Bretton Woods Institutions]

By Richard Baldwin

Journal of Economic Perspectives, Winter 2016

When the General Agreement on Tariffs and Trade was signed by 23 nations in 1947, the goal was to establish a rules-based world trading system and to facilitate mutually advantageous trade liberalization. As the GATT evolved over time and morphed into the...

Will We Ever Stop Using Fossil Fuels?

[Symposium: Oil and Gas Markets]

By Thomas Covert, Michael Greenstone, and Christopher R. Knittel

Journal of Economic Perspectives, Winter 2016

Scientists believe significant climate change is unavoidable without a drastic reduction in the emissions of greenhouse gases from the combustion of fossil fuels. However, few countries have implemented comprehensive policies that price this externality o...

Forty Years of Oil Price Fluctuations: Why the Price of Oil May Still Surprise Us

[Symposium: Oil and Gas Markets]

By Christiane Baumeister and Lutz Kilian

Journal of Economic Perspectives, Winter 2016

It has been 40 years since the oil crisis of 1973/74. This crisis has been one of the defining economic events of the 1970s and has shaped how many economists think about oil price shocks. In recent years, a large literature on the economic determinants o...

Using Natural Resources for Development: Why Has It Proven So Difficult?

[Symposium: Oil and Gas Markets]

By Anthony J. Venables

Journal of Economic Perspectives, Winter 2016

Developing economies have found it hard to use natural resource wealth to improve their economic performance. Utilizing resource endowments is a multistage economic and political problem that requires private investment to discover and extract the resourc...

Power Laws in Economics: An Introduction

By Xavier Gabaix

Journal of Economic Perspectives, Winter 2016

Many of the insights of economics seem to be qualitative, with many fewer reliable quantitative laws. However a series of power laws in economics do count as true and nontrivial quantitative laws—and they are not only established empirically, but al...