The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks

By Domenico Ferraro and Giuseppe Fiori

American Economic Journal: Macroeconomics, April 2020

We study how the changing demographic composition of the US labor force has affected the response of the unemployment rate to marginal tax rate shocks. Using narratively identified tax changes as proxies for structural shocks, we establish that the respon...

Implications of Labor Market Frictions for Risk Aversion and Risk Premia

By Eric T. Swanson

American Economic Journal: Macroeconomics, April 2020

A flexible labor margin allows households to absorb asset value shocks with changes in hours worked, altering the households' attitudes toward risk (Swanson 2012). This paper analyzes how frictional labor markets affect that analysis. Risk aversion is hig...

Uninsured Unemployment Risk and Optimal Monetary Policy in a Zero-Liquidity Economy

By Edouard Challe

American Economic Journal: Macroeconomics, April 2020

I study optimal monetary policy in a sticky-price economy wherein households precautionary-save against uninsured, endogenous unemployment risk. In this economy greater unemployment risk raises desired savings, causing aggregate demand to fall and feed ...

Did Unconventional Interventions Unfreeze the Credit Market?

By Hui Tong and Shang-Jin Wei

American Economic Journal: Macroeconomics, April 2020

This paper investigates whether and how unconventional interventions in 2008–2010 unfroze the credit market. We construct a dataset of 198 interventions for 16 countries during 2008–2010 and examine heterogeneous responses in stock prices to the inter...

Dynamic Debt Deleveraging and Optimal Monetary Policy

By Pierpaolo Benigno, Gauti B. Eggertsson, and Federica Romei

American Economic Journal: Macroeconomics, April 2020

This paper proposes a postcrisis New Keynesian model that incorporates agent heterogeneity in borrowing and lending with a minimum set of assumptions. Unlike the standard framework, this model makes the natural rate of interest endogenous and dependent on...

Evolutionary Theorizing in Economics

[Symposium: Evolutionary Economics]

By Richard R. Nelson and Sidney G. Winter

Journal of Economic Perspectives, Spring 2002

This paper reviews the case for an evolutionary approach to problems of economic analysis, ranging from the details of individual firm behavior in the short run through industrial dynamics to the historical evolution of institutions and technologies. We d...

The Marginal Propensity to Consume over the Business Cycle

By Tal Gross, Matthew J. Notowidigdo, and Jialan Wang

American Economic Journal: Macroeconomics, April 2020

We estimate how the marginal propensity to consume (MPC) out of liquidity varies over the business cycle. Ten years after a Chapter 7 bankruptcy, the bankruptcy flag is removed from the filer's credit report, generating an increase in credit score. In the...

Front Matter

American Economic Review, April 2020

The New Tools of Monetary Policy

By Ben S. Bernanke

American Economic Review, April 2020

To overcome the limits on traditional monetary policy imposed by the effective lower bound on short-term interest rates, in recent years the Federal Reserve and other advanced-economy central banks have deployed new policy tools. This lecture reviews wh...

Targeted Debt Relief and the Origins of Financial Distress: Experimental Evidence from Distressed Credit Card Borrowers

By Will Dobbie and Jae Song

American Economic Review, April 2020

We study the drivers of financial distress using a large-scale field experiment that offered randomly selected borrowers a combination of (i) immediate payment reductions to target short-run liquidity constraints and (ii) delayed interest write-downs to t...

The Effects of Income Transparency on Well-Being: Evidence from a Natural Experiment

By Ricardo Perez-Truglia

American Economic Review, April 2020

In 2001, Norwegian tax records became easily accessible online, allowing everyone in the country to observe the incomes of everyone else. According to the income comparisons model, this change in transparency can widen the gap in well-being between richer...

Industrial Espionage and Productivity

By Albrecht Glitz and Erik Meyersson

American Economic Review, April 2020

In this paper, we investigate the economic returns to industrial espionage. We show that the flow of information provided by East German informants in the West over the period 1970–1989 led to a significant narrowing of sectoral TFP gaps between West an...

Evolution and Game Theory

[Symposium: Evolutionary Economics]

By Larry Samuelson

Journal of Economic Perspectives, Spring 2002

Research in noncooperative game theory has focused attention on two questions: Should we expect equilibrium play? If so, which of the multiple equilibria that arise in many games should we expect? This paper summarizes recent approaches to these questions...

Are Ideas Getting Harder to Find?

By Nicholas Bloom, Charles I. Jones, John Van Reenen, and Michael Webb

American Economic Review, April 2020

Long-run growth in many models is the product of two terms: the effective number of researchers and their research productivity. We present evidence from various industries, products, and firms showing that research effort is rising substantially while re...

Who Acquires Information in Dealer Markets?

By Jesper Rüdiger and Adrien Vigier

American Economic Review, April 2020

We study information acquisition in dealer markets. We first identify a one-sided strategic complementarity in information acquisition: the more informed traders are, the larger market makers' gain from becoming informed. When quotes are observable, this ...

Time Discounting and Wealth Inequality

By Thomas Epper, Ernst Fehr, Helga Fehr-Duda, Claus Thustrup Kreiner, David Dreyer Lassen, Søren Leth-Petersen, and Gregers Nytoft Rasmussen

American Economic Review, April 2020

This paper documents a large association between individuals' time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged indi...

A Theory of Experimenters: Robustness, Randomization, and Balance

By Abhijit V. Banerjee, Sylvain Chassang, Sergio Montero, and Erik Snowberg

American Economic Review, April 2020

This paper studies the problem of experiment design by an ambiguity-averse decision-maker who trades off subjective expected performance against robust performance guarantees. This framework accounts for real-world experimenters' preference for randomiz...

Steering the Climate System: Using Inertia to Lower the Cost of Policy: Comment

By Linus Mattauch, H. Damon Matthews, Richard Millar, Armon Rezai, Susan Solomon, and Frank Venmans

American Economic Review, April 2020

Lemoine and Rudik (2017) argues that it is efficient to delay reducing carbon emissions, due to supposed inertia in the climate system's response to emissions. This conclusion rests upon misunderstanding the relevant earth system modeling: there is no sub...

Steering the Climate System: Using Inertia to Lower the Cost of Policy: Reply

By Derek Lemoine and Ivan Rudik

American Economic Review, April 2020

Mattauch et al. (2020) claims that the quantitative conclusions in Lemoine and Rudik (2017)—henceforth, LR17—are not robust to using a climate model consistent with recent scientific results. We observe that LR17 in fact analyzes an extension to a mor...

Evolution of Social Behavior: Individual and Group Selection

[Symposium: Evolutionary Economics]

By Theodore C. Bergstrom

Journal of Economic Perspectives, Spring 2002

How selfish does our evolutionary history suggest that humans will be? We explore models in which groups are formed and dissolved and where reproduction of individuals is determined by their payoffs in a game played within groups. If groups are formed "ra...