Front Matter

American Economic Review, September 2019

Consumers as Tax Auditors

By Joana Naritomi

American Economic Review, September 2019

To investigate the enforcement value of third-party information on potentially collusive taxpayers, I study an anti-tax evasion program that rewards consumers for ensuring that firms report sales and establishes a verification system to aid whistle-blowin...

Brands in Motion: How Frictions Shape Multinational Production

By Keith Head and Thierry Mayer

American Economic Review, September 2019

Following the 2016 Leave vote in the referendum on UK membership in the EU and the election of Donald Trump, trade agreements have entered a period of great instability. To predict the impact of possible disruptions to existing arrangements requires count...

Bank Networks and Systemic Risk: Evidence from the National Banking Acts

By Haelim Anderson, Mark Paddrik, and Jessie Jiaxu Wang

American Economic Review, September 2019

The National Banking Acts (NBAs) of 1863–1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and detailed interbank deposits in 1862 and 1867 in ...

Family Health Behaviors

By Itzik Fadlon and Torben Heien Nielsen

American Economic Review, September 2019

We study how health behaviors are shaped through family spillovers. We leverage administrative data to identify the effects of health shocks on family members' consumption of preventive care and health-related behaviors, constructing counterfactuals for a...

Bayesian Identification: A Theory for State-Dependent Utilities

By Jay Lu

American Economic Review, September 2019

We provide a revealed preference methodology for identifying beliefs and utilities that can vary across states. A notion of comparative informativeness is introduced that is weaker than the standard Blackwell ranking. We show that beliefs and state-depend...

Slow Moving Debt Crises

By Guido Lorenzoni and Iván Werning

American Economic Review, September 2019

We study slow moving debt crises: self-fulfilling equilibria in which high interest rates, due to the fear of a future default, lead to a gradual but faster accumulation of debt, ultimately validating investors' fear. We show that slow moving crises arise...

Bargaining over Babies: Theory, Evidence, and Policy Implications

By Matthias Doepke and Fabian Kindermann

American Economic Review, September 2019

It takes a woman and a man to make a baby. This fact suggests that for a birth to take place, the parents should first agree on wanting a child. Using newly available data on fertility preferences and outcomes, we show that indeed, babies are likely to ar...

Pre-event Trends in the Panel Event-Study Design

By Simon Freyaldenhoven, Christian Hansen, and Jesse M. Shapiro

American Economic Review, September 2019

We consider a linear panel event-study design in which unobserved confounds may be related both to the outcome and to the policy variable of interest. We provide sufficient conditions to identify the causal effect of the policy by exploiting covariates re...

How Efficient Is Dynamic Competition? The Case of Price as Investment

By David Besanko, Ulrich Doraszelski, and Yaroslav Kryukov

American Economic Review, September 2019

We study industries where the price that a firm sets serves as an investment into lower cost or higher demand. We assess the welfare implications of the ensuing competition for the market using analytical and numerical approaches to compare the equilibria...

The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco

By Rebecca Diamond, Tim McQuade, and Franklin Qian

American Economic Review, September 2019

Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals' migration, we find rent control limits renters' mo...

Front Matter

American Economic Review: Insights, September 2019

The Model Selection Curse

By Kfir Eliaz and Ran Spiegler

American Economic Review: Insights, September 2019

A statistician takes an action on behalf of an agent, based on the agent's self-reported personal data and a sample involving other people. The action that he takes is an estimated function of the agent's report. The estimation procedure involves model se...

Household Matters: Revisiting the Returns to Capital among Female Microentrepreneurs

By Arielle Bernhardt, Erica Field, Rohini Pande, and Natalia Rigol

American Economic Review: Insights, September 2019

Multiple field experiments report positive financial returns to capital shocks for male and not female microentrepreneurs. But these analyses overlook the fact that female entrepreneurs often reside with male entrepreneurs. Using data from experiments in ...

When Work Disappears: Manufacturing Decline and the Falling Marriage Market Value of Young Men

By David Autor, David Dorn, and Gordon Hanson

American Economic Review: Insights, September 2019

We exploit the gender-specific components of large-scale labor demand shocks stemming from rising international manufacturing competition to test how shifts in the relative economic stature of young men versus young women affected marriage, fertility, and...

Honesty via Choice-Matching

By Jakša Cvitanić, Dražen Prelec, Blake Riley, and Benjamin Tereick

American Economic Review: Insights, September 2019

We introduce choice-matching, a class of mechanisms for eliciting honest responses to a multiple choice question (MCQ), as might appear in a market research study, opinion poll, or economics experiment. Under choice-matching, respondents are compensated t...

The Dollar, Bank Leverage, and Deviations from Covered Interest Parity

By Stefan Avdjiev, Wenxin Du, Cathérine Koch, and Hyun Song Shin

American Economic Review: Insights, September 2019

We document a triangular relationship in that a stronger dollar goes hand in hand with larger deviations from covered interest parity (CIP) and contractions of cross-border bank lending in dollars. We argue that underpinning the triangle is the role of th...

Estimating US Consumer Gains from Chinese Imports

By Liang Bai and Sebastian Stumpner

American Economic Review: Insights, September 2019

We estimate the size of US consumer gains from Chinese imports during 2004–2015. Using barcode-level price and expenditure data, we construct inflation rates under CES preferences, and use Chinese exports to Europe as an instrument. We find significant ...

Do the Rich Get Richer in the Stock Market? Evidence from India

By John Y. Campbell, Tarun Ramadorai, and Benjamin Ranish

American Economic Review: Insights, September 2019

We use data on Indian stock portfolios to show that return heterogeneity is the primary contributor to increasing inequality of wealth held in risky assets by Indian individual investors. Return heterogeneity increases equity wealth inequality through two...

Divest, Disregard, or Double Down? Philanthropic Endowment Investments in Objectionable Firms

By Brigitte Roth Tran

American Economic Review: Insights, September 2019

How much, if at all, should an endowment invest in a firm whose activities run counter to the charitable missions the endowment funds? I offer the first model characterizing this type of investment decision. I introduce a strategy called "mission hedging,...