Editors' Introduction

By William R. Johnson and Kelly Markel

American Economic Review, May 2016

Restoring Rational Choice: The Challenge of Consumer Financial Regulation

By John Y. Campbell

American Economic Review, May 2016

This lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively. The lecture argues that financial ignorance is pervasive and unsurprising given the...

The Phillips Curve: Back to the '60s?

By Olivier Blanchard

American Economic Review, May 2016

This paper reexamines the behavior of inflation and unemployment and reaches four conclusions: 1) The U.S. Phillips curve is alive and well (at least as well as in the past). 2) Inflation expectations however have become steadily more anchored. 3) The slo...

Dealing with Long-Term Deficits

By Martin Feldstein

American Economic Review, May 2016

The United States faces a rising future ratio of debt to GDP that, if allowed to continue, would have serious adverse consequences for the American economy. Fortunately, policy changes can increase the size of the future GDP and shrink the future budget d...

Monetary Policy, Financial Stability, and the Zero Lower Bound

By Stanley Fischer

American Economic Review, May 2016

Much has happened in the world of central banking in the past decade. In this paper, I focus on three issues associated with the zero lower bound (ZLB) on short-term nominal interest rates and the nexus between monetary policy and financial stability: 1) ...

How to Restore Equitable and Sustainable Economic Growth in the United States

By Joseph E. Stiglitz

American Economic Review, May 2016

Today's weakness in the US economy results from lack of aggregate demand, due to high and growing inequality, underinvestment in public infrastructure and technology that is complementary to private capital, continuing mild austerity, difficulties encount...

Can We Restart the Recovery All Over Again?

By John B. Taylor

American Economic Review, May 2016

Many have argued that a deviation from good economic policy has been a cause of the poor U.S. economic performance of the past decade and that policy reforms are needed to restore strong growth. Yet others argue that the recent stagnation is secular or th...

A Century of Growth and Improvement

By Benjamin M. Friedman

American Economic Review, May 2016

The fact that actual economic advance over time normally means producing and consuming different things is usually left implicit in modern models of economic growth. By contrast, qualitative change--new goods and services, and better versions of what alre...

The Rise and Fall of American Growth: Exploring the Numbers

By Nicholas Crafts

American Economic Review, May 2016

This paper reviews some of the major claims in Robert Gordon's Rise and Fall of American Growth. His argument that growth of conventional real GDP per person is well below that of real living standards is accepted. It is shown that adding an impu...

State Capacity and American Technology: Evidence from the Nineteenth Century

By Daron Acemoglu, Jacob Moscona, and James A. Robinson

American Economic Review, May 2016

Robert Gordon's The Rise and Fall of American Economic Growth compellingly shows how technical innovation, stimulated by the country's institutions, has radically improved the living standards of the citizens of the US. We conduct an empirical in...

Winter Is Coming: Robert Gordon and the Future of Economic Growth

By Gregory Clark

American Economic Review, May 2016

This comment assesses the claim of The Rise and Fall of American Growth that for coming decades, growth in US TFP will continue the disappointing pace of the last decade. While predicting future technological advance is difficult, there are indic...

Perspectives on The Rise and Fall of American Growth

By Robert J. Gordon

American Economic Review, May 2016

This paper summarizes the book and assesses the reviews contained in the four contributed papers. Gregory Clark provides convincing arguments that extend the book's forecast that future technological change will be slower. Nicholas Crafts shows declining ...

Infrastructure, Incentives, and Institutions

By Nava Ashraf, Edward L. Glaeser, and Giacomo A. M. Ponzetto

American Economic Review, May 2016

Expensive infrastructure is ineffective if it doesn't travel the last mile. In nineteenth-century New York and modern Africa, disease has spread when urbanites chose not to use newly built sanitation infrastructure to save money. Either subsidies or Pigou...

Guns, Latrines, and Land Reform: Dynamic Pigouvian Taxation

By Michael Kremer and Jack Willis

American Economic Review, May 2016

Dynamically and statically optimal Pigouvian subsidies and taxes on durables will differ in a growing economy. In a dynamic game, consumers may delay purchasing durables with positive externalities, such as latrines, anticipating greater future subsidies....

Appliance Ownership and Aspirations among Electric Grid and Home Solar Households in Rural Kenya

By Kenneth Lee, Edward Miguel, and Catherine Wolfram

American Economic Review, May 2016

In Sub-Saharan Africa, there are active debates about whether increases in energy access should be driven by investments in electric grid infrastructure or small-scale "home solar" systems (e.g., solar lanterns and solar home systems). We summarize the re...

Productivity and Selection of Human Capital with Machine Learning

By Aaron Chalfin, Oren Danieli, Andrew Hillis, Zubin Jelveh, Michael Luca, Jens Ludwig, and Sendhil Mullainathan

American Economic Review, May 2016

Economists have become increasingly interested in studying the nature of production functions in social policy applications, with the goal of improving productivity. Traditionally models have assumed workers are homogenous inputs. However, in practice, su...

Cities Are Physical Too: Using Computer Vision to Measure the Quality and Impact of Urban Appearance

By Nikhil Naik, Ramesh Raskar, and César A. Hidalgo

American Economic Review, May 2016

For social scientists, developing an empirical connection between the physical appearance of a city and the behavior and health of its inhabitants has proved challenging due to a lack of data on urban appearance. Can we use computers to quantify urban app...

The Rapid Adoption of Data-Driven Decision-Making

By Erik Brynjolfsson and Kristina McElheran

American Economic Review, May 2016

We provide a systematic empirical study of the diffusion and adoption patterns of data-driven decision making (DDD) in the U.S. Using data collected by the Census Bureau for a large representative sample of manufacturing plants, we find that DDD rates nea...

Copyright Infringement in the Market for Digital Images

By Hong Luo and Julie Holland Mortimer

American Economic Review, May 2016

Digital technologies for sharing creative goods create new opportunities for copyright infringement and challenge established enforcement methods. We establish several important facts about the nature of copyright infringement and efforts to settle past i...

Agglomeration of Invention in the Bay Area: Not Just ICT

By Chris Forman, Avi Goldfarb, and Shane Greenstein

American Economic Review, May 2016

We document that the Bay Area rose from 4% of all successful US patent applications in 1976 to 16% in 2008. This is partly driven by the increase in the prevalence of information and communication technology; however, even for patents unrelated to informa...