Aggregation and the PPP Puzzle in a Sticky-Price Model

By Carlos Carvalho and Fernanda Nechio

American Economic Review, October 2011

We study the purchasing power parity (PPP) puzzle in a multisector, two-country, sticky-price model. Sectors differ in the extent of price stickiness, leading to heterogeneous sectoral real exchange rate dynamics. Deviations from PPP are more volatile and...

Hazardous Waste Cleanup, Neighborhood Gentrification, and Environmental Justice: Evidence from Restricted Access Census Block Data

By Shanti Gamper-Rabindran and Christopher Timmins

American Economic Review, May 2011

We test for residential sorting and changes in neighborhood characteristics in response to the cleanup of hazardous waste sites using restricted access fine-geographical-resolution block data. We examine changes between 1990 and 2000 in blocks within 5km ...

Inequality and Economic Growth: The Perspective of the New Growth Theories

By Philippe Aghion, Eve Caroli, and Cecilia Garcia-Penalosa

Journal of Economic Literature, December 1999

We analyze the relationship between inequality and economic growth from two directions. The first part of the survey examines the effect of inequality on growth, showing that when capital markets are imperfect, there is not necessarily a trade-off between...

Classroom Games: Trading in a Pit Market

By Charles A. Holt

Journal of Economic Perspectives, Winter 1996

This paper describes a classroom exercise that resembles trading in the 'pit' of some financial and futures markets. Playing cards are used to induce supply and demand functions. Instructions and helpful hints are provided. The exercise facilitates an und...

News Shocks and the Slope of the Term Structure of Interest Rates: Comment

By Danilo Cascaldi-Garcia

American Economic Review, October 2017

Kurmann and Otrok (2013) establish that the effects on economic activity from news on future productivity growth are similar to the effects from unexpected changes in the slope of the yield curve. This comment shows that these results become substantially...

Ten Little Treasures of Game Theory and Ten Intuitive Contradictions

By Jacob K. Goeree and Charles A. Holt

American Economic Review, December 2001

This paper reports laboratory data for games that are played only once. These games span the standard categories: static and dynamic games with complete and incomplete information. For each game, the treasure is a treatment in which behavior conforms nice...

Infrastructure Quality and the Subsidy Trap

By Shaun McRae

American Economic Review, January 2015

Electricity and water are often subsidized in developing countries to increase their affordability for low-income households. Ideally, such subsidies would create sufficient demand in poor neighborhoods to encourage private investment in their infrastruct...

Incentives and Prosocial Behavior

By Roland Bénabou and Jean Tirole

American Economic Review, December 2006

We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive fo...

Heuristics and Heterogeneity in Health Insurance Exchanges: Evidence from the Massachusetts Connector

By Keith Marzilli Ericson and Amanda Starc

American Economic Review, May 2012

We examine heuristic decision rules in consumer choice on health insurance exchanges using data from the Massachusetts Connector. Consumers may have difficulty making optimal choices in a complex environment. The heuristic "choose the cheapest plan" is s...

Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments: Comment

By Gary E. Bolton and Axel Ockenfels

American Economic Review, December 2006

Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency

By Kira R. Fabrizio, Nancy L. Rose, and Catherine D. Wolfram

American Economic Review, September 2007

While neoclassical models assume static cost-minimization by firms, agency models suggest that firms may not minimize costs in less-competitive or regulated environments. We test this using a transition from cost-of-service regulation to marketoriented ...

Converging to American: Healthy Immigrant Effect in Children of Immigrants

By Mónica García-Pérez

American Economic Review, May 2016

We analyze children of immigrants' healthy immigrant effect using parental year of arrival and region of birth. Using data from Integrated National Health Interview Survey 2008-2014, we evaluate children of immigrants' health status by using obesity rates...

Why Do Programmers Earn More in Houston Than Hyderabad? Evidence from Randomized Processing of US Visas

By Michael A. Clemens

American Economic Review, May 2013

Why do workers earn so much more in the United States than in India? This study compares the earnings of workers in the two countries in a unique setting. The product is perfectly tradable (software), technology differences are nil (they are members of th...

Bubbles and Total Factor Productivity

By Jianjun Miao and Pengfei Wang

American Economic Review, May 2012

This paper presents an infinite-horizon model of production economies in which firms face idiosyncratic productivity shocks and are subject to endogenous credit constraints. Credit-driven stock price bubbles can arise which can relax credit constraints an...

How Can Scandinavians Tax So Much?

[Symposium: Tax Enforcement and Compliance]

By Henrik Jacobsen Kleven

Journal of Economic Perspectives, Fall 2014

American visitors to Scandinavian countries are often puzzled by what they observe: despite large income redistribution through distortionary taxes and transfers, these are very high-income countries. They rank among the highest in the world in terms of ...

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...

Mismatch

By Robert Shimer

American Economic Review, September 2007

This paper develops a dynamic model of mismatch. Workers and jobs are randomly allocated to labor markets. Each market clears, but some have excess (unemployed) workers and some have excess (vacant) jobs. As workers and jobs switch markets, unemployed ...

Targeting Long Rates in a Model with Segmented Markets

By Charles T. Carlstrom, Timothy S. Fuerst, and Matthias Paustian

American Economic Journal: Macroeconomics, January 2017

This paper develops a model of segmented financial markets in which the net worth of financial institutions limits the degree of arbitrage across the term structure. The model is embedded into the canonical Dynamic New Keynesian (DNK) framework. We estima...

Why Do People Give? Testing Pure and Impure Altruism

By Mark Ottoni-Wilhelm, Lise Vesterlund, and Huan Xie

American Economic Review, November 2017

Researchers measure crowd-out around one level of charity output to identify whether giving is motivated by altruism and/or warm-glow. However, crowd-out depends on output, implying first that the power to reject pure altruism varies, and second that a ...

Religion and Innovation

By Roland Bénabou, Davide Ticchi, and Andrea Vindigni

American Economic Review, May 2015

In earlier work we identified a robust negative association between religiosity and patents per capita, holding across countries as well as US states. In this paper we relate 11 indicators of individual openness to innovation (e.g., attitudes toward scien...