Moving to a Job: The Role of Home Equity, Debt, and Access to Credit

By Yuliya Demyanyk, Dmytro Hryshko, María Jose Luengo-Prado, and Bent E. Sørensen

American Economic Journal: Macroeconomics, April 2017

We use individual-level credit reports merged with loan-level mortgage data to estimate how home equity interacted with mobility in relatively weak and strong labor markets in the United States during the Great Recession. We construct a dynamic model of h...

Safe Assets, Liquidity, and Monetary Policy

By Pierpaolo Benigno and Salvatore Nisticò

American Economic Journal: Macroeconomics, April 2017

This paper studies monetary policy in models where multiple assets have different liquidity properties: safe and "pseudo-safe" assets coexist. A shock worsening the liquidity properties of the pseudo-safe assets raises interest rate spreads and can cause ...

Credit Relationships and Business Bankruptcy during the Great Depression

By Mary Eschelbach Hansen and Nicolas L. Ziebarth

American Economic Journal: Macroeconomics, April 2017

Credit relationships are sticky. Stickiness makes relationships beneficial to borrowers in times of their own distress but makes them potentially problematic when lenders themselves face hardship. To examine the role of credit relationships during a finan...

Nominal Exchange Rate Determinacy under the Threat of Currency Counterfeiting

By Pedro Gomis-Porqueras, Timothy Kam, and Christopher Waller

American Economic Journal: Macroeconomics, April 2017

We study the endogenous choice to accept fiat objects as media of exchange and their implications for nominal exchange rate determination. We consider a two-country environment with two currencies that can be used to settle any transactions. However, curr...

Front Matter

American Economic Journal: Microeconomics, May 2017

Dynamic Agenda Setting

By Ying Chen and Hülya Eraslan

American Economic Journal: Microeconomics, May 2017

A party in power can address a limited number of issues. What issues to address--the party's agenda--has dynamic implications because it affects what issues will be addressed in the future. We analyze a model in which the incumbent addresses one issue amo...

The Good Samaritan and Traffic on the Road to Jericho

By Ted Bergstrom

American Economic Journal: Microeconomics, May 2017

This paper studies a version of the Volunteer's Dilemma in which players sequentially observe someone in trouble and decide whether to help. Where preferences are identical, we show that if the frequency with which potential helpers appear is above some t...

Conditional Retrospective Voting in Large Elections

By Ignacio Esponda and Demian Pouzo

American Economic Journal: Microeconomics, May 2017

We introduce a solution concept in the context of large elections with private information by embedding a model of boundedly rational voters into an otherwise standard equilibrium setting. A retrospective voting equilibrium (RVE) formalizes the idea that ...

Strategic Vote Trading in Power Sharing Systems

By Dimitrios Xefteris and Nicholas Ziros

American Economic Journal: Microeconomics, May 2017

This paper studies decentralized vote trading in a power sharing system that follows the rules of strategic market games. In particular, we study a two-party election in which prior to the voting stage, voters are free to trade votes for money. Voters hol...

Accountability and Information in Elections

By Scott Ashworth, Ethan Bueno de Mesquita, and Amanda Friedenberg

American Economic Journal: Microeconomics, May 2017

Elections are thought to improve voter welfare through two channels: effective accountability (i.e., providing incentives for politicians to take costly effort) and electoral selection (i.e., retaining politicians with characteristics voters value). We ...

Pricing Institutions and the Welfare Cost of Adverse Selection

By E. Glen Weyl and André Veiga

American Economic Journal: Microeconomics, May 2017

To mitigate adverse selection in insurance markets, individuals are often mandated to buy at least a baseline plan, but may choose to opt into a premium plan. In some markets, such as US health exchanges, each plan is responsible for the full expenses of ...

How Important Can the Non-violation Clause Be for the GATT/WTO?

By Robert W. Staiger and Alan O. Sykes

American Economic Journal: Microeconomics, May 2017

The "non-violation" clause of GATT is Exhibit A for the proposition that international trade agreements are incomplete contracts. According to the terms-of-trade theory of trade agreements, it underpins the success of the GATT/WTO's "shallow integration" ...

Disclosure and Legal Advice

By Yeon-Koo Che and Sergei Severinov

American Economic Journal: Microeconomics, May 2017

This paper examines how the advice that lawyers provide to their clients affects the disclosure of evidence and the outcome of adjudication, and how the adjudicator should allocate the burden of proof in light of these effects. Despite lawyers' expertise ...

Designing Matching Mechanisms under General Distributional Constraints

By Masahiro Goto, Fuhito Kojima, Ryoji Kurata, Akihisa Tamura, and Makoto Yokoo

American Economic Journal: Microeconomics, May 2017

To handle various applications, we study matching under constraints. The only requirement on the constraints is heredity; given a feasible matching, any matching with fewer students at each school is also feasible. Heredity subsumes existing constraints s...

Age-Dependent Payoffs and Assortative Matching by Age in a Market with Search

By Anja Sautmann

American Economic Journal: Microeconomics, May 2017

This paper considers a matching market with two-sided search and transferable utility where match payoffs depend on age at marriage (time until match) and search is finite. We define and prove existence of equilibrium, and provide sufficient conditions fo...

Aggregate Uncertainty Can Lead to Incorrect Herds

By Ignacio Monzón

American Economic Journal: Microeconomics, May 2017

A continuum of homogeneous rational agents choose between two competing technologies. Agents observe a private signal and sample others' previous choices. Signals have an aggregate component of uncertainty, so aggregate behavior does not necessarily refle...

Procurement Design with Corruption

By Roberto Burguet

American Economic Journal: Microeconomics, May 2017

I investigate the design of optimal procurement mechanisms in the presence of corruption. After contracting with the sponsor, the contractor may bribe the inspector to misrepresent quality. The mechanism affects whether bribery occurs. I discuss the cases...

Front Matter

American Economic Journal: Economic Policy, May 2017

The Economics of Rights: Does the Right to Counsel Increase Crime?

By Itai Ater, Yehonatan Givati, and Oren Rigbi

American Economic Journal: Economic Policy, May 2017

We examine the broad consequences of the right to counsel by exploiting a legal reform in Israel that extended the right to publicly provided legal counsel to suspects in arrest proceedings. Using the staggered regional rollout of the reform, we find that...

Financial Incentives, Hospital Care, and Health Outcomes: Evidence from Fair Pricing Laws

By Michael Batty and Benedic Ippolito

American Economic Journal: Economic Policy, May 2017

State laws that limit how much hospitals are paid by uninsured patients provide a unique opportunity to study how financial incentives of health care providers affect the care they deliver. We estimate the laws reduce payments from uninsured patients by 2...