The Optimal Conduct of Monetary Policy with Interest on Reserves

By Anil K. Kashyap and Jeremy C. Stein

American Economic Journal: Macroeconomics, January 2012

In a world with interest on reserves, the central bank has two distinct tools that it can use to raise the short-term policy rate: it can either increase the interest it pays on reserve balances, or it can reduce the quantity of reserves in the system. We...

Central Bank Communication and Expectations Stabilization

By Stefano Eusepi and Bruce Preston

American Economic Journal: Macroeconomics, July 2010

The value of communication is analyzed in a model in which agents' expectations need not be consistent with central bank policy. Without communication, the Taylor principle is not sufficient for macroeconomic stability: divergent learning dynamics are pos...

Iodine Deficiency and Schooling Attainment in Tanzania

By Erica Field, Omar Robles, and Maximo Torero

American Economic Journal: Applied Economics, October 2009

Cognitive damage from iodine deficiency disorders (IDD) has important implications for economic growth through its effect on human capital. To gauge the magnitude of this influence, we evaluate the impact on schooling of reductions in IDD from intensiv...

Teacher Testing, Teacher Education, and Teacher Characteristics

By Joshua D. Angrist and Jonathan Guryan

American Economic Review, May 2004

Housing Bubbles

By Óscar Arce and David López-Salido

American Economic Journal: Macroeconomics, January 2011

We use the notion of a housing bubble as an equilibrium in which some investors hold houses for resale purposes only and not with the expectation of receiving a dividend, either in the form of rent or utility. We show that an economy with looser collatera...

Housing Wealth and Consumption: Evidence from Geographically-Linked Microdata

By Aditya Aladangady

American Economic Review, November 2017

Rising home values also raise the cost of living, offsetting their impact on consumption. However, additional home equity collateral can loosen borrowing constraints, increasing spending for households that value their current endowment of housing highl...

Regression Discontinuity Designs in Economics

By David S. Lee and Thomas Lemieux

Journal of Economic Literature, June 2010

This paper provides an introduction and "user guide" to Regression Discontinuity (RD) designs for empirical researchers. It presents the basic theory behind the research design, details when RD is likely to be valid or invalid given economic incentives, ...

Who Pays for Obesity?

By Jay Bhattacharya and Neeraj Sood

Journal of Economic Perspectives, Winter 2011

Adult obesity is a growing problem. From 1962 to 2006, obesity prevalence nearly tripled to 35.1 percent of adults. The rising prevalence of obesity is not limited to a particular socioeconomic group and is not unique to the United States. Should this wid...

The Economics of Convention

By H. Peyton Young

Journal of Economic Perspectives, Spring 1996

The purpose of conventions is to coordinate people's expectations in economic and social interactions that have multiple equilibria. Conventions often emerge endogenously from the accumulation of many precedents, a process that can be modeled as a stochas...

E-Books: A Tale of Digital Disruption

By Richard J. Gilbert

Journal of Economic Perspectives, Summer 2015

E-book sales surged after Amazon introduced the Kindle e-reader at the end of 2007 and accounted for about one quarter of all trade book sales by the end of 2013. Amazon's aggressive (low) pricing of e-books led to allegations that e-books were bankrupt...

Retrospectives: Hume on Money, Commerce, and the Science of Economics

By Margaret Schabas and Carl Wennerlind

Journal of Economic Perspectives, Summer 2011

David Hume (1711-1776) is arguably the most esteemed philosopher to have written in the English language. During his lifetime, however, Hume was as well if not better known for his contributions to political economy, particularly for the essays published ...

The FOMC versus the Staff: Where Can Monetary Policymakers Add Value?

By Christina D. Romer and David H. Romer

American Economic Review, May 2008

Generalized Social Marginal Welfare Weights for Optimal Tax Theory

By Emmanuel Saez and Stefanie Stantcheva

American Economic Review, January 2016

This paper proposes to evaluate tax reforms by aggregating money metric losses and gains of different individuals using "generalized social marginal welfare weights." Optimum tax formulas take the same form as standard welfarist tax formulas by simply sub...

The Power of Forward Guidance Revisited

By Alisdair McKay, Emi Nakamura, and Jón Steinsson

American Economic Review, October 2016

In recent years, central banks have increasingly turned to forward guidance as a central tool of monetary policy. Standard monetary models imply that far future forward guidance has huge effects on current outcomes, and these effects grow with the horizon...

Shopping for Anonymous Shell Companies: An Audit Study of Anonymity and Crime in the International Financial System

[Symposium: Tax Havens]

By J. C. Sharman

Journal of Economic Perspectives, Fall 2010

The last few years have seen an international campaign to ensure that the world's financial and banking systems are "transparent," meaning that every actor and transaction within the system can be traced to a discrete, identifiable individual. I present a...

The Labeling Effect of a Child Benefit System

By Peter Kooreman

American Economic Review, June 2000

Globalization, Labor Markets and Policy Backlash in the Past

[Symposium: Globalization in Perspective]

By Jeffrey G. Williamson

Journal of Economic Perspectives, Fall 1998

The late nineteenth and twentieth centuries have many things in common. Both periods recorded fast growth, convergence, and labor-market integration between OECD members. Both periods witnessed intense debate about who gained and who lost from globalizati...

Fighting Poverty One Experiment at a Time: Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty: Review Essay

By Martin Ravallion

Journal of Economic Literature, March 2012

Abhijit Banerjee and Esther Duflo offer a coherent vision for an economics of poverty and antipoverty policy. Their economics is grounded in an effort to understand the economic and psychological complexities in the lives of poor people, informed by socia...

Peacekeeping Force: Effects of Providing Tactical Equipment to Local Law Enforcement

By Matthew C. Harris, Jinseong Park, Donald J. Bruce, and Matthew N. Murray

American Economic Journal: Economic Policy, August 2017

We provide the first local level empirical analysis of the causal effects of providing military equipment to local police. Employing a novel combination of publicly available county-year panel data matched to hand-collected data on citizen complaints, we ...

The Missing Transmission Mechanism in the Monetary Explanation of the Great Depression

By Christina D. Romer and David H. Romer

American Economic Review, May 2013

This paper examines the missing transmission mechanism in Friedman's and Schwartz's monetary explanation of the Great Depression. We review the challenge provided by the decline in nominal interest rates in the early 1930s, and show that the monetary expl...