Economic Winners versus Losers and the Unequal Pandemic Recession

By Fernando Cirelli and Mark Gertler

American Economic Journal: Macroeconomics, July 2025

During the pandemic recession, firms directly exposed to the virus—i.e. the "contact" sector—contracted sharply and recovered slowly relative to the rest of the economy. Less understood is how firms that "won" by offering safer substitutes for contact...

Domestic Policies and Sovereign Default

By Emilio Espino, Julian Kozlowski, Fernando M. Martin, and Juan M. Sánchez

American Economic Journal: Macroeconomics, July 2025

A model with two essential elements—sovereign default and distortionary fiscal and monetary policies—explains the interaction between sovereign debt, default risk, and inflation in emerging countries. We derive conditions under which monetary policy i...

Uncertainty Shocks, Adjustment Costs, and Firm Beliefs: Evidence from a Representative Survey

By Andreas Dibiasi, Heiner Mikosch, and Samad Sarferaz

American Economic Journal: Macroeconomics, July 2025

This paper studies the dynamic effects of an uncertainty shock on firm expectations. We conduct a survey that confronts managers from a representative firm sample with a model-consistent uncertainty shock scenario. An exogenous increase in uncertainty sig...

Fiscal Backing for Price Stability in a Monetary Union

By Bartosz Maćkowiak and Sebastian Schmidt

American Economic Journal: Macroeconomics, July 2025

Fiscal backing is the idea that for the price level to be uniquely determined, fiscal policy must be active at least in some states of the world. We extend the fiscal theory of the price level to a heterogenous monetary union. Different combinations of na...

Nominal Devaluations, Inflation, and Inequality

By Andrés Blanco, Andrés Drenik, and Emilio Zaratiegui

American Economic Journal: Macroeconomics, July 2025

We study the distribution of labor income during large devaluations. Across countries, inequality falls after large devaluations within the context of a surge in inflation and a fall and subsequent recovery of real labor income. To better understand inequ...

Estimating Macrofiscal Effects of Climate Shocks from Billions of Geospatial Weather Observations

By Berkay Akyapı, Matthieu Bellon, and Emanuele Massetti

American Economic Journal: Macroeconomics, July 2025

The literature studying the macroeconomics of weather has focused on temperature and precipitation annual averages, while microstudies have focused more on extreme weather measures. We construct hundreds of variables from high-frequency, high-spatial-reso...

What Caused the US Pandemic-Era Inflation?

By Ben Bernanke and Olivier Blanchard

American Economic Journal: Macroeconomics, July 2025

We estimate a simple dynamic model of prices, wages, and short-run and long-run inflation expectations that allows us to analyze and quantify the sources of recent US inflation. We find that, contrary to early concerns that inflation would be spurred by o...

An American Macroeconomic Picture: Supply and Demand Shocks in the Frequency Domain

By Mario Forni, Luca Gambetti, Antonio Granese, Luca Sala, and Stefano Soccorsi

American Economic Journal: Macroeconomics, July 2025

We provide a few new empirical facts that theoretical models should feature in order to be consistent with the data. (i) There are two classes of shocks: demand and supply. Supply shocks have long-run effects on economic activity; demand shocks do not. (i...

Search, Screening, and Sorting

By Xiaoming Cai, Pieter Gautier, and Ronald Wolthoff

American Economic Journal: Macroeconomics, July 2025

We examine how search frictions impact labor market sorting by constructing a model consistent with evidence that employers interview a subset of a pool of applicants. We derive necessary and sufficient conditions for sorting in applications and matches. ...

Call for Papers: IDB Young Economist Award

[News]

June 27, 2025

The submission deadline is July 15, 2025.

Front Matter

American Economic Review, July 2025

Innovative Ideas and Gender (In)equality

By Marlène Koffi

American Economic Review, July 2025

This paper analyzes recognition of women's innovative ideas compared to men's using bibliometric data in economics, mathematics, and sociology. I establish similarities between papers to construct relevant counterfactual citations. On average, all-female ...

Undergraduate Gender Diversity and the Direction of Scientific Research

By Francesca Truffa and Ashley Wong

American Economic Review, July 2025

Can diversity lead to greater research focus on populations under-represented in science? Between 1960 and 1990, 76 all-male US universities transitioned to coeducation. Using a generalized difference-in-differences design, we find that coeducation led to...

A Stepping Stone Approach to Norm Transitions

By Selim Gulesci, Sam Jindani, Eliana La Ferrara, David Smerdon, Munshi Sulaiman, and Peyton Young

American Economic Review, July 2025

We propose a model to study when an intermediate action can serve as a stepping stone that enables the elimination of a harmful norm. While the intermediate action may facilitate the first "step," it may also become a new norm. We derive intuitive conditi...

The Debt-Inflation Channel of the German (Hyper) Inflation

By Markus Brunnermeier, Sergio Correia, Stephan Luck, Emil Verner, and Tom Zimmermann

American Economic Review, July 2025

This paper studies how a large increase in the price level is transmitted to the real economy through firm balance sheets. Using newly digitized macro- and micro-level data from the German inflation of 1919–1923, we show that inflation led to a large re...

The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States

By Andrew Atkeson, Jonathan Heathcote, and Fabrizio Perri

American Economic Review, July 2025

The US net foreign asset position declined sharply after 2007, reaching negative 60 percent of GDP by the third quarter of 2023. This deterioration primarily reflects a US-specific rise in corporate asset values that inflated the value of US equity liabil...

Effects of Enhanced Legal Aid in Child Welfare: Evidence from a Randomized Trial of Mi Abogado

By Ryan Cooper, Joseph J. Doyle, and Andrés Hojman

American Economic Review, July 2025

Children spend years in foster care, and bureaucratic hurdles can unnecessarily prolong their stays. The Mi Abogado program was introduced in Chile to enhance legal aid for foster children and accelerate family reunification. In a novel approach, the Chil...

Mission Motivation and Public Sector Performance: Experimental Evidence from Pakistan

By Muhammad Yasir Khan

American Economic Review, July 2025

This paper studies, through a randomized field experiment involving community health workers in Pakistan, if public sector organizations can improve worker performance by investing in their mission motivation. The findings reveal that training aimed at st...

The Long-Run Effects of Government Spending

By Juan Antolin-Diaz and Paolo Surico

American Economic Review, July 2025

Military spending has large and persistent effects on output because it shifts the composition of public spending toward R&D. This boosts innovation and private investment in the medium term and increases productivity and GDP at longer horizons. Public R&...

Home Price Expectations and Spending: Evidence from a Field Experiment

By Felix Chopra, Christopher Roth, and Johannes Wohlfart

American Economic Review, July 2025

We conduct a field experiment with US households to study how expectations about long-run home price growth shape spending decisions. We exogenously vary survey respondents' expectations by providing different expert forecasts. Homeowners' spending, measu...