Promoting Economic Literacy: Panel Discussion

American Economic Review, May 2002

Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence

By Subodh Kumar and R. Robert Russell

American Economic Review, June 2002

We decompose labor-productivity growth into components attributable to (1) technological change (shifts in the world production frontier), (2) technological catch-up (movements toward or away from the frontier), and (3) capital accumulation (movement alon...

An Experimental Test of an Optimal Growth Model

By Vivian Lei and Charles N. Noussair

American Economic Review, June 2002

This paper describes the design and behavior of an experimental economy with the structure of the Ramsey-Cass-Koopmans model of optimal growth. The experiment includes three different implementations of the model: a decentralized implementation with multi...

Tax Reform and Automatic Stabilization

By Thomas J. Kniesner and James P. Ziliak

American Economic Review, June 2002

An income tax provides implicit insurance by dampening the variability of disposable income and consumption. Using an empirical framework derived from the consumption insurance literature and data from the Panel Study of Income Dynamics we examine the eff...

Reputation and Competition

By Johannes Hörner

American Economic Review, June 2002

This paper shows how competition generates reputation-building behavior in repeated interactions when the product quality observed by consumers is a noisy signal of firms' effort level. There are two types of firms and "good" firms try to distinguish them...

Litigation Costs and Returns to Experience

By Paul Oyer and Scott Schaefer

American Economic Review, June 2002

We develop a model linking maximum damage awards available to plaintiffs in wrongful termination lawsuits, workers' propensity to sue as a function of experience, and returns to experience. Using Equal Employment Opportunity Commission data on protected-w...

The Household Bankruptcy Decision

By Scott Fay, Erik Hurst, and Michelle J. White

American Economic Review, June 2002

Auditors' Report/Audited Financial Statements

American Economic Review, June 2002

The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?

By Tobias J. Moskowitz and Annette Vissing-Jørgensen

American Economic Review, September 2002

We document the return to investing in U.S. nonpublicly traded equity. Entrepreneurial investment is extremely concentrated, yet despite its poor diversification, we find that the returns to private equity are no higher than the returns to public equity. ...

Managing Dynamic Competition

By Tracy R. Lewis and Huseyin Yildirim

American Economic Review, September 2002

In many important high-technology markets, including software development, data processing, communications, aeronautics, and defense, suppliers learn through experience how to provide better service at lower cost. This paper examines how a buyer designs d...

Rigidity, Discretion, and the Costs of Writing Contracts

By Pierpaolo Battigalli and Giovanni Maggi

American Economic Review, September 2002

In this paper we model contract incompleteness "from the ground up," as arising endogenously from the costs of describing the environment and the parties' behavior. Optimal contracts may exhibit two forms of incompleteness: discretion, meaning that the co...

Contractual Structure and Wealth Accumulation

By Dilip Mookherjee and Debraj Ray

American Economic Review, September 2002

Can historical wealth distributions affect long-run output and inequality despite "rational" saving, convex technology and no externalities? We consider a model of equilibrium short-period financial contracts, where poor agents face credit constraints owi...

Rating Banks: Risk and Uncertainty in an Opaque Industry

By Donald P. Morgan

American Economic Review, September 2002

The pattern of disagreement between bond raters suggests that banks and insurance firms are inherently more opaque than other types of firms. Moody's and S&P split more often over these financial intermediaries, and the splits are more lopsided, as th...

Testing Intertemporal Substitution, Implicit Contracts, and Hours Restriction Models of the Labor Market Using Micro Data

By John C. Ham and Kevin T. Reilly

American Economic Review, September 2002

We present new tests of three theories of the labor market: intertemporal substitution, hours restrictions, and implicit contracts. The intertemporal substitution test we implement is an exclusion test robust to many specification errors and we consistent...

Targeting Nominal Income Growth or Inflation?

By Henrik Jensen

American Economic Review, September 2002

Within a simple New Keynesian model emphasizing forward-looking behavior of private agents, I evaluate optimal nominal income growth targeting versus optimal inflation targeting. When the economy is mainly subject to shocks that do not involve monetary po...

Geography of the Family

By Kai A. Konrad, Harald Künemund, Kjell Erik Lommerud, and Julio R. Robledo

American Economic Review, September 2002

We study the residential choice of siblings who are altruistic towards their parents. The firstborn child's location choice influences the behavior of the second-born child and can shift some of the burden of providing care for the parents from one child ...

Longer-Term Effects of Head Start

By Eliana Garces, Duncan Thomas, and Janet Currie

American Economic Review, September 2002

Specially collected data on adults in the Panel Study of Income Dynamics are used to provide evidence on the longer-term effects of Head Start, an early intervention program for poor preschool-age children. Whites who attended Head Start are, relative to ...

Dynamic Inconsistencies: Counterfactual Implications of a Class of Rational-Expectations Models

By Arturo Estrella and Jeffrey C. Fuhrer

American Economic Review, September 2002

Terror as a Bargaining Instrument: A Case Study of Dowry Violence in Rural India

By Francis Bloch and Vijayendra Rao

American Economic Review, September 2002

Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates

By Bruce A. Blonigen and Stephen E. Haynes

American Economic Review, September 2002