Sovereign Debt, Default Risk, and the Liquidity of Government Bonds

By Gaston Chaumont

American Economic Journal: Macroeconomics

Secondary markets for sovereign bonds are illiquid because of trad- ing frictions. I build a framework with endogenous illiquidity to study its implications on credit spreads and default risk. The model integrates directed search in secondary markets i...

Outside Options and Worker Effort

By Alexander Ahammer, Matthias Fahn, and Flora Stiftinger

American Economic Journal: Applied Economics

We study how outside options affect workers’ incentives to exert effort. We exploit quasiexperimental variation from age- and experience-based cutoffs in Austria’s unemployment insurance (UI), and proxy effort with absenteeism. Extending potential U...

Dynamic Complementarity

By James Heckman, Haihan Tian, Zijian Zhang, and Jin Zhou

American Economic Journal: Applied Economics

Dynamic complementarity is the concept that past investments that lead to higher stocks of skill at one age promote the growth of skills from investment at that age. We define and provide evidence on dynamic complementarity using unique Chinese data fr...

Mission and Margin: A Practical Guide to University Finances by Daniel Diermeier and Brett C. Sweet

By John Y. Campbell

Journal of Economic Literature

The Impact of Affirmative Action Litigation On Police Killings of Civilians

By Robynn Cox, Jamein P. Cunningham, and Alberto Ortega

American Economic Journal: Applied Economics

Although research has shown that court-ordered hiring quotas increase the number of minority police officers in litigated cities, there has been little insight into how workforce diversity, or lack thereof, may impact police violence against civilians. ...

Validating Hospital Quality Indicators and the Causal Effect of Hospital Closures

By Amitabh Chandra, Maurice Dalton, and Douglas O. Staiger

American Economic Review

We evaluate the validity of commonly used hospital quality indicators using hospital closures that reallocate large numbers of patients to hospitals of different quality. Using over 20 years of Medicare claims for over 30 million patients admitted with...

Investment, Emissions, and Reliability in Electricity Markets

By Jonathan T. Elliott

American Economic Review

This paper explores how to reduce emissions from electricity generation while preventing blackouts. Wind and solar are zero-emissions but intermittent, which can lead to blackouts if the entry of renewables causes more reliable power plants to retire. I...

Optimal Monetary Policy during a Cost-of-Living Crisis

By Alan Olivi, Vincent Sterk, and Dajana Xhani

American Economic Review

How should monetary policy respond to sectoral shocks in a world where consumption baskets vary systematically across households? We present a multi-sector New-Keynesian model with generalized, non-homothetic preferences and inequality. The output gap ...

Departmental Seed Grants for Innovation in Diversity and Inclusion

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Prime Locations

By Gabriel M. Ahlfeldt, Thilo N. H. Albers, and Kristian Behrens

American Economic Review: Insights, September 2026

We develop a method for delineating prime locations—ultradense clusters of economic activity—within cities and apply it to comprehensive establishment data covering all US metropolitan areas. We further use big data to extend the analysis to a global ...

What Is Newsworthy? Theory and Evidence

By Luis Armona, Matthew Gentzkow, Emir Kamenica, and Jesse M. Shapiro

American Economic Review: Insights, September 2026

We introduce a model in which a benevolent news outlet decides whether to report the realization of a state to a consumer, who pays a cost to receive it. A simple statistical rule, called a proper scoring rule, describes when the outlet should be more lik...

Pricing with Algorithms

By Rohit Lamba and Sergey Zhuk

American Economic Review: Insights, September 2026

This paper studies Markov perfect equilibria in a repeated duopoly model where sellers choose algorithms. An algorithm is a mapping from the competitor's price to own price. Once set, the algorithms respond quickly. Customers arrive randomly, and sellers ...

Unconditional Convergence in Manufacturing: A Reassessment

By Berthold Herrendorf, Richard Rogerson, and Ákos Valentinyi

American Economic Review: Insights, September 2026

The movement of labor out of agriculture is a central feature of the development process. A long-held view is that successful development requires that much of the labor released from agriculture be allocated to manufacturing rather than services. Rodrik'...

The Missing Middle Managers: Labor Costs, Firm Structure, and Development

By Jonas Hjort, Hannes Malmberg, and Todd Schoellman

American Economic Review: Insights, September 2026

Using data obtained from human resources consulting firms, we document the cost to large firms of hiring managers and business professionals in 146 countries worldwide. The average pay in the poorest decile of countries is $18,000 per year, which is 9.7 t...

The Missing Loan-to-Value Cycle

By Manuel Adelino, W. Ben McCartney, and Antoinette Schoar

American Economic Review: Insights, September 2026

We show that the equilibrium loan-to-value (LTV) distribution in the US mortgage market has been remarkably stable over the last quarter century, both in aggregate and region by region, despite large, cross-sectionally heterogeneous house price cycles. Wh...

How Test-Optional Policies in College Admissions Disproportionately Harm High-Achieving Applicants from Disadvantaged Backgrounds

By Bruce Sacerdote, Douglas O. Staiger, and Michele Tine

American Economic Review: Insights, September 2026

We analyze data from one elite institution and find that test score-optional policies harm the likelihood of admission for high-achieving applicants from disadvantaged backgrounds. Under test-optional policies, these applicants submit test scores at too l...

Screening Adaptive Cartels

By Juan Ortner, Sylvain Chassang, and Kei Kawai

American Economic Review: Insights, September 2026

We propose an equilibrium theory of data-driven antitrust oversight in which regulators launch investigations on the basis of suspicious bidding patterns and cartels can adapt to the statistical screens used by regulators. Our main result establishes that...

Front Matter

American Economic Review: Insights, September 2026

CSWEP South

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Presidential Address: Neighborhood Effects and Missing Markets for Opportunity

By Lawrence F. Katz

American Economic Review, September 2026

Experimental and quasi-experimental studies show that childhood neighborhoods have substantial causal impacts on children's adult earnings and other long-term socioeconomic outcomes. Several market failures are likely to lead to excessive residential segr...