Fiscal Policy and Economic Recovery: The Case of the 1936 Veterans' Bonus

By Joshua K. Hausman

American Economic Review, April 2016

Conventional wisdom has it that in the 1930s fiscal policy did not work because it was not tried. This paper shows that fiscal policy was tried in 1936. The veterans' bonus of 1936 paid 2 percent of GDP to 3.2 million veterans; the typical veteran rece...

The Caloric Costs of Culture: Evidence from Indian Migrants

By David Atkin

American Economic Review, April 2016

Anthropologists have documented substantial and persistent differences in food preferences across social groups. My paper asks whether such food cultures can constrain caloric intake? I first document that interstate migrants within India consume fewe...

The Bidder's Curse: Comment

By Henry S. Schneider

American Economic Review, April 2016

The prices of auctions on eBay often exceed eBay's fixed-price "Buy- It-Now" prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained "without al...

The Bidder's Curse: Reply

By Ulrike Malmendier

American Economic Review, April 2016

An important unresolved issue in the search literature is the question to what extent suboptimal search reflects "traditional search frictions," and to what extent it reflects behavioral biases. The distinction is important for assessing welfare, predi...

Search, Liquidity, and the Dynamics of House Prices and Construction: Corrigendum

By Allen Head, Huw Lloyd-Ellis, and Hongfei Sun

American Economic Review, April 2016

Immigrants' Effect on Native Workers: New Analysis on Longitudinal Data

By Mette Foged and Giovanni Peri

American Economic Journal: Applied Economics, April 2016

Using longitudinal data on the universe of workers in Denmark during the period 1991-2008, we track the labor market outcomes of low-skilled natives in response to an exogenous inflow of low- skilled immigrants. We innovate on previous identification str...

The Returns to Microenterprise Support among the Ultrapoor: A Field Experiment in Postwar Uganda

By Christopher Blattman, Eric P. Green, Julian Jamison, M. Christian Lehmann, and Jeannie Annan

American Economic Journal: Applied Economics, April 2016

We show that extremely poor, war-affected women in northern Uganda have high returns to a package of $150 cash, five days of business skills training, and ongoing supervision. Sixteen months after grants, participants doubled their microenterprise ownersh...

Spring Forward at Your Own Risk: Daylight Saving Time and Fatal Vehicle Crashes

By Austin C. Smith

American Economic Journal: Applied Economics, April 2016

Daylight Saving Time (DST) impacts over 1.5 billion people, yet many of its impacts on practicing populations remain uncertain. Exploiting the discrete nature of DST transitions and a 2007 policy change, I estimate the impact of DST on fatal automobile cr...

Market Impacts of a Nuclear Power Plant Closure

By Lucas Davis and Catherine Hausman

American Economic Journal: Applied Economics, April 2016

Falling revenues and rising costs have put US nuclear plants in financial trouble, and some threaten to close. To understand the potential private and social consequences, we examine the abrupt closure of the San Onofre Nuclear Generating Station (SONGS) ...

Internal Labor Migration as a Shock Coping Strategy: Evidence from a Typhoon

By André Gröger and Yanos Zylberberg

American Economic Journal: Applied Economics, April 2016

We analyze how internal labor migration facilitates shock coping in rural economies. Employing high-precision satellite data, we identify objective variations in the inundations generated by a catastrophic typhoon in Vietnam and match them with household ...

Income Opportunities and Sea Piracy in Indonesia: Evidence from Satellite Data

By Sebastian Axbard

American Economic Journal: Applied Economics, April 2016

The effect of climatic variation on conflict and crime is well established, but less is known about the mechanism through which this effect operates. This study contributes to the literature by exploiting a new source of exogenous variation in climate to...

Beyond Statistics: The Economic Content of Risk Scores

By Liran Einav, Amy Finkelstein, Raymond Kluender, and Paul Schrimpf

American Economic Journal: Applied Economics, April 2016

"Big data" and statistical techniques to score potential transactions have transformed insurance and credit markets. In this paper, we observe that these widely-used statistical scores summarize a much richer heterogeneity, and may be endogenous to the c...

The Returns to Medical School: Evidence from Admission Lotteries

By Nadine Ketel, Edwin Leuven, Hessel Oosterbeek, and Bas van der Klaauw

American Economic Journal: Applied Economics, April 2016

We exploit admission lotteries to estimate the returns to medical school in the Netherlands. Using data from up to 22 years after the lottery, we find that in every single year after graduation doctors earn at least 20 percent more than people who end up ...

Front Matter

American Economic Journal: Applied Economics, April 2016

Financial Liberalization, Debt Mismatch, Allocative Efficiency, and Growth

By Romain Rancière and Aaron Tornell

American Economic Journal: Macroeconomics, April 2016

Financial liberalization increases growth, but leads to more crises and costly bailouts. We present a two-sector model in which liberalization, by allowing debt-denomination mismatch, relaxes borrowing limits in the financially constrained sector, but en...

Does the Technological Content of Government Demand Matter for Private R&D? Evidence from US States

By Viktor Slavtchev and Simon Wiederhold

American Economic Journal: Macroeconomics, April 2016

Governments purchase everything from airplanes to zucchini. This paper investigates the role of the technological content of government procurement in innovation. In a theoretical model, we first show that a shift in the composition of public purchases to...

The Simple Economics of Commodity Price Speculation

By Christopher R. Knittel and Robert S. Pindyck

American Economic Journal: Macroeconomics, April 2016

The price of crude oil never exceeded $40 per barrel until mid-2004. By July 2008 it peaked at $145 and by late 2008 it fell to $30 before increasing to $110 in 2011. Are speculators partly to blame for these price changes? Using a simple model of supply ...

The Response of Tail Risk Perceptions to Unconventional Monetary Policy

By Masazumi Hattori, Andreas Schrimpf, and Vladyslav Sushko

American Economic Journal: Macroeconomics, April 2016

We examine the impact of unconventional monetary policy (UMP) on stock market tail risk and risks of extreme interest rate movements. We find that UMP announcements substantially reduced option-implied equity market tail risks and interest rate risks. Mo...

The Exchange Rate Response to Monetary Policy Innovations

By Viktoria Hnatkovska, Amartya Lahiri, and Carlos A. Vegh

American Economic Journal: Macroeconomics, April 2016

We present a new data fact: in response to a monetary tightening, the domestic currency tends to appreciate in developed countries but depreciate in developing countries. A model is developed to rationalize this contrasting pattern. It has three key chann...

A Road Map for Efficiently Taxing Heterogeneous Agents

By Marios Karabarbounis

American Economic Journal: Macroeconomics, April 2016

This paper characterizes optimal labor income taxes that depend on age, household assets, and filing status (one or two earners) within a life-cycle model with heterogeneous, two-member households. The key innovation is a labor supply elasticity that vari...