Is College Financial Aid Equitable and Efficient?

By Aaron S. Edlin

Journal of Economic Perspectives, Spring 1993

Two families with identical earnings paths pay dramatically different amounts for college if one saves more than the other. Because saving leads to receiving less financial aid, a family's return to saving is substantially below the social return. This ma...

The Berlin Stock Exchange in Imperial Germany: A Market for New Technology?

By Sibylle Lehmann-Hasemeyer and Jochen Streb

American Economic Review, November 2016

Analyzing 474 cases of firms going public in the German capital between 1892 and 1913, we show that innovative firms could rely on the Berlin stock market as a source of financing. Our data also reveal that initial public offerings (IPO) of innovative fir...

A Reconsideration of Hedonic Price Indexes with an Application to PC's

By Ariel Pakes

American Economic Review, December 2003

This paper compares hedonic to matched model indexes. Matched model indexes are averages of the price changes of goods that remain on sampled stores' shelves. Since goods that disappear tend to have falling market values, matched model indexes select from...

Product Market Regulation and Market Work: A Benchmark Analysis

By Lei Fang and Richard Rogerson

American Economic Journal: Macroeconomics, April 2011

Recent empirical work finds a negative correlation between product market regulation and aggregate employment. We examine the effect of product market regulations on hours worked in a benchmark model of time allocation. Product market regulations affect m...

Can We Restart the Recovery All Over Again?

By John B. Taylor

American Economic Review, May 2016

Many have argued that a deviation from good economic policy has been a cause of the poor U.S. economic performance of the past decade and that policy reforms are needed to restore strong growth. Yet others argue that the recent stagnation is secular or th...

What Is the Value of Terroir?

By Robin Cross, Andrew J. Plantinga, and Robert N. Stavins

American Economic Review, May 2011

We examine the value of terroir—the set of special characteristics of a location that impart unique qualities to the wine produced. We conduct a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attribut...

Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home

By Joseph J. Doyle

American Economic Journal: Applied Economics, July 2011

Health care spending varies widely across markets, and previous research finds little evidence that higher spending translates into better health outcomes. The main innovation in this paper exploits this cross-sectional variation in hospital spending in a...

Why Financial Structure Matters

By Joseph E. Stiglitz

Journal of Economic Perspectives, Fall 1988

[This is a comment on "The Modigliani-Miller Propositions after Thirty Years" by Merton H. Miller in this same issue.] The 1958 paper by Franco Modigliani and Merton Miller has been justly hailed as a landmark in the modern theory of finance. What has not...

Peddling Influence through Intermediaries

By Wei Li

American Economic Review, June 2010

A sender may communicate with a decision maker through intermediaries. In this model, an objective sender and intermediary pass on information truthfully, while biased ones favor a particular agenda but also have reputational concerns. I show that the bia...

Rationality in Extensive-Form Games

[Symposium: Common Knowledge]

By Philip J. Reny

Journal of Economic Perspectives, Fall 1992

Let us adopt the classical point of view that a theory of games is a description of "rational" behavior. Consequently, equipped with a book entitled "Theory of Games," any individual in any strategic situation need only consult the book to make a "rationa...

Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment

By Gharad Bryan, Dean Karlan, and Jonathan Zinman

American Economic Journal: Microeconomics, August 2015

Empirical evidence on peer intermediation lags behind both theory and practice in which lenders use peers to mitigate adverse selection and moral hazard. Using a referral incentive under individual liability, we develop a two-stage field experiment that p...

Consistency and Heterogeneity of Individual Behavior under Uncertainty

By Syngjoo Choi, Raymond Fisman, Douglas Gale, and Shachar Kariv

American Economic Review, December 2007

By using graphical representations of simple portfolio choice problems, we generate a very rich dataset to study behavior under uncertainty at the level of the individual subject. We test the data for consistency with the maximization hypothesis, and w...

Symposium on the Budget Deficit

[Symposium: Budget Deficit]

By Janet L. Yellen

Journal of Economic Perspectives, Spring 1989

Is the ballooning federal budget deficit a serious economic problem? The papers in this symposium provide four perspectives on this issue. Robert Barro and Robert Eisner disagree sharply with the "majority" opinion concerning deficits. In contrast, Edward...

The Institutions of Monetary Policy

By Mervyn King

American Economic Review, May 2004

Like Father, Like Son: Social Network Externalities and Parent-Child Correlation in Behavior

By Antoni Calvó-Armengol and Matthew O. Jackson

American Economic Journal: Microeconomics, February 2009

We build an overlapping generations model where an individual sees higher returns to adopting a behavior as many neighbors adopt the behavior. We show that overlap in the state of a parent and child's neighborhood can lead to correlation in parent-chil...

Profiting from Regulation: Evidence from the European Carbon Market

By James B. Bushnell, Howard Chong, and Erin T. Mansur

American Economic Journal: Economic Policy, November 2013

We investigate how cap-and-trade regulation affects profits. In late April 2006, the EU CO2 allowance price dropped 50 percent, equating to a €28 billion reduction in the value of aggregate annual allowances. We examine daily returns for 552 stocks f...

Testable Implications of Gross Substitutes in Demand for Two Goods

By Christopher P. Chambers, Federico Echenique, and Eran Shmaya

American Economic Journal: Microeconomics, February 2011

We present a nonparametric "revealed-preference test" for gross substitutes in demand for two goods. (JEL D01, D11)

The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution

By N. Gregory Mankiw and Matthew Weinzierl

American Economic Journal: Economic Policy, February 2010

Should the income tax include a credit for short taxpayers and a surcharge for tall ones? The standard utilitarian framework for tax analysis answers this question in the affirmative. Moreover, a plausible parameterization using data on height and wage...

Does Competition Among Public Schools Benefit Students and Taxpayers? Comment

By Jesse Rothstein

American Economic Review, December 2007

Contracting in Vague Environments

By Marie-Louise Vierø

American Economic Journal: Microeconomics, May 2012

This paper shows that a new trade-off arises in the optimal contract when contracting takes place with vague information (objective ambiguity), reflecting that real-world contracting often takes place under imprecise information. The choice-theoretic fram...