Interbank Rate Uncertainty and Bank Lending

By Carlo Altavilla, Giacomo Carboni, Michele Lenza, and Harald Uhlig

American Economic Journal: Macroeconomics

We propose a new measure of interbank rate uncertainty, defined as the crosssectional dispersion in interbank market rates for overnight unsecured loans. We show that higher interbank rate uncertainty increases lending rates for firm loans, with larger...

The Economic Consequences of Effective Carbon Taxes

By Felix Kapfhammer

American Economic Journal: Macroeconomics

This paper studies the sectoral and macroeconomic consequences of carbon taxes in four Nordic countries using a novel monthly measure of effective carbon tax rates. The suggested measure accounts for the time-varying emission coverage of taxes that are...

The Effects of Biased Labor Market Expectations on Consumption, Wealth Inequality, and Welfare

By Almut Balleer, Georg Duernecker, Susanne Forstner, and Johannes Goensch

American Economic Journal: Macroeconomics

We analyze survey data for the U.S. and document a substantial optimistic bias of households in their subjective expectations about future labor market transitions. Using a heterogeneous agents life cycle model we show that the optimistic bias has a quant...

AEASP: Participants

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Front Matter

American Economic Review, August 2025

Monopsony and Employer Misoptimization Explain Why Wages Bunch at Round Numbers

By Arindrajit Dube, Alan Manning, and Suresh Naidu

American Economic Review, August 2025

We show that administrative hourly wage data exhibit considerable bunching at round numbers. We run two experiments randomizing wages around $0.10 and $1.00 to experimentally measure left-digit bias for identical tasks on Amazon Mechanical Turk; we fail t...

Direct and Indirect Effects of Investment Tax Incentives

By Adrian Lerche

American Economic Review, August 2025

This paper estimates the direct effects and indirect spillover effects of investment tax credits on firms. Exploiting a differential tax credit rate change by firm size in the German manufacturing sector, I find that lowering a firm's investment cost by 7...

Robustness Measures for Welfare Analysis

By Zi Yang Kang and Shoshana Vasserman

American Economic Review, August 2025

Economists routinely make functional form assumptions on demand curves to derive welfare conclusions. How sensitive are these conclusions to such assumptions? In this paper, we develop robustness measures that quantify the extent to which the true demand ...

Employers and Unemployment Insurance Take-Up

By Marta Lachowska, Isaac Sorkin, and Stephen A. Woodbury

American Economic Review, August 2025

We quantify the employer's role in unemployment insurance (UI) take-up. Employer effects on claiming and appeals are substantial, and those effects are negatively correlated, consistent with appeals deterring claims. Low-wage workers are less likely to cl...

From Retributive to Restorative: An Alternative Approach to Justice in Schools

By Anjali Adukia, Benjamin Feigenberg, and Fatemeh Momeni

American Economic Review, August 2025

School districts historically approached conflict resolution from the perspective that suspending disruptive students was necessary to protect their classmates, even if this caused harm to perceived offenders. Restorative practices (RP)—focusing on repa...

Monetary Policy and Rational Asset Price Bubbles: Comment

By Franklin Allen, Gadi Barlevy, and Douglas Gale

American Economic Review, August 2025

Galí (2014) showed that a monetary policy rule that raises rates when bubbles exceed some steady-state benchmark can paradoxically lead to larger deviations from steady state. Nevertheless, this comment shows that a central bank can always dampen a bubbl...

Keep Your Enemies Closer: Strategic Platform Adjustments during US and French Elections

By Rafael Di Tella, Randy Kotti, Caroline Le Pennec, and Vincent Pons

American Economic Review, August 2025

We study changes in political discourse during campaigns, using a novel dataset of candidate websites for US House elections, 2002–2016, and manifestos for French parliamentary and local elections, 1958–2022. We find that candidates move to the center...

Cursed Sequential Equilibrium

By Meng-Jhang Fong, Po-Hsuan Lin, and Thomas R. Palfrey

American Economic Review, August 2025

This paper develops a framework to extend the strategic form analysis of cursed equilibrium (CE) developed by Eyster and Rabin (2005) to multistage games. The approach uses behavioral strategies rather than normal form mixed strategies and imposes sequent...

Underbidding for Oil and Gas Tracts

By Julien Martin, Martin Pesendorfer, and Jack Shannon

American Economic Review, August 2025

Common values auction models, where bidder decisions depend on noisy signals of common values, provide predictions about Bayesian Nash equilibrium (BNE) outcomes. In settings where these common values can be estimated, these predictions can be tested. We ...

The Negligible Effect of Free Contraception on Fertility: Experimental Evidence from Burkina Faso

By Pascaline Dupas, Seema Jayachandran, Adriana Lleras-Muney, and Pauline Rossi

American Economic Review, August 2025

We conducted a randomized trial among 14,545 households in rural Burkina Faso to test the oft-cited hypothesis that limited access to contraception is an important driver of high fertility rates in West Africa. We do not find support for this hypothesis. ...

Monetary Policy and Rational Asset Price Bubbles

By Jordi Galí

American Economic Review, March 2014

I examine the impact of alternative monetary policy rules on a rational asset price bubble, through the lens of an overlapping generations model with nominal rigidities. A systematic increase in interest rates in response to a growing bubble is shown to e...

Development programs in war zones

[Research Highlight]

July 29, 2025

Did development aid in Afghanistan help counter the Taliban’s insurgency?

Can Development Programs Counter Insurgencies? Evidence from a Field Experiment in Afghanistan

By Andrew Beath, Fotini Christia, and Ruben Enikolopov

American Economic Journal: Applied Economics, July 2025

We exploit a randomized controlled trial conducted between 2007 and 2011 to identify the effect of Afghanistan's largest local governance and development program on the strength of the insurgency. We find that the program reduced violence, improved econom...

Parallel Digital Currencies and Sticky Prices

By Harald Uhlig and Taojun Xie

American Economic Journal: Macroeconomics

The rise of digital currencies may result in domestic parallel currencies. Their exchange rate shocks present new challenges for monetary policy. We analyze these issues in a New Keynesian framework. Firms set prices in one of the currencies. A one-tim...

The Life-Cycle Implications of Temporary Employment Contracts

By Rosemary Kaiser

American Economic Journal: Macroeconomics

Employment protections often create two-tiered labor markets with substantial differences in job security. I estimate the effects of removing these protections using a quantitative life-cycle model, where younger workers are more likely to select into ...