The Past, Present, and Future of Macroeconomic Forecasting

By Francis X. Diebold

Journal of Economic Perspectives, Spring 1998

Broadly defined, macroeconomic forecasting is alive and well. Nonstructural forecasting, which is based largely on reduced-form correlations, has always been well and continues to improve. Structural forecasting, which aligns itself with economic theory a...

Taking the Pulse of the Economy: Measuring GDP

By J. Steven Landefeld, Eugene P. Seskin, and Barbara M. Fraumeni

Journal of Economic Perspectives, Spring 2008

This article provides a broad overview of the measurement techniques used in estimating GDP and the national accounts in the United States. In the United States, the GDP and the national accounts estimates are fundamentally based on detailed economic cen...

Institutions, Factor Prices, and Taxation: Virtues of Strong States?

By Daron Acemoglu

American Economic Review, May 2010

Evaluating Uncertain Evidence with Sir Thomas Bayes: A Note for Teachers

By Steven C. Salop

Journal of Economic Perspectives, Summer 1987

Consider the following problem: On the night of March 1, 1986, in Lorain, Ohio, John Doe was struck by a speeding taxi as he crossed the street. The taxi was driving the wrong way down a one-way street and did not stop. An eyewitness thought that the taxi...

Comparative Risk Aversion in the Presence of Ambiguity

By Marie-Charlotte Guetlein

American Economic Journal: Microeconomics, August 2016

his paper suggests a characterization of increases in risk aversion within the smooth ambiguity model by Klibanoff, Marinacci, and Mukerji (2005). I show that an increase in risk aversion is qualitatively different from that under expected utility, due to...

At Least Do No Harm: The Use of Scarce Data

By Alvaro Sandroni

American Economic Journal: Microeconomics, February 2014

When data is scarce, it is difficult to screen the opinions of informed and uninformed experts. In spite of this difficulty it is possible to deliver incentives for informed experts to honestly reveal their views, and for uninformed experts to do no harm ...

International Portfolio Allocation under Model Uncertainty

By Pierpaolo Benigno and Salvatore Nisticò

American Economic Journal: Macroeconomics, January 2012

This paper revisits an old argument, hedging real exchange rate risk, as an explanation of the international home bias in equity. In a dynamic model, the relevant risk to be hedged is the long-run risk as opposed to the short-run risk. Domestic equity is ...

Harmonization and Side Payments in Political Cooperation

By Bård Harstad

American Economic Review, June 2007

For two districts or countries that try to internalize externalities, I analyze a bargaining game under private information. I derive conditions for when it is efficient with uniform policies across regions—with and without side payments— a...

Reflections on Finance and the Good Society

By Robert J. Shiller

American Economic Review, May 2013

The concept of the Good Society--grounded in principles of reciprocity and the Golden Rule--is as ancient as human civilization. To many the concept may appear in conflict with the goings-on of financial markets. This may be especially true after the fina...

Government Spending and Legislative Organization: Quasi-experimental Evidence from Germany

By Peter Egger and Marko Koethenbuerger

American Economic Journal: Applied Economics, October 2010

This paper presents empirical evidence of a positive effect of council size on government spending using a dataset of 2,056 municipalities in the German state of Bavaria over a period of 21 years. We apply a regression discontinuity design to avoid an end...

Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program

By Olivier Deschênes, Michael Greenstone, and Joseph S. Shapiro

American Economic Review, October 2017

The demand for air quality depends on health impacts and defensive investments, but little research assesses the empirical importance of defenses. A rich quasi-experiment suggests that the Nitrogen Oxides (NOx) Budget Program (NBP), a cap-and-trade market...

Globalization, Brain Drain, and Development

By Frédéric Docquier and Hillel Rapoport

Journal of Economic Literature, September 2012

This paper reviews four decades of economics research on the brain drain, with a focus on recent contributions and on development issues. We first assess the magnitude, intensity, and determinants of the brain drain, showing that brain drain (or high-skil...

Battle Scars? The Puzzling Decline in Employment and Rise in Disability Receipt among Vietnam Era Veterans

By David H. Autor, Mark G. Duggan, and David S. Lyle

American Economic Review, May 2011

Using Current Population Survey and US Army administrative data, we document that between 2000 and 2010, the employment rate of Vietnam era veterans fell markedly relative to non-veterans of the same cohorts while simultaneously their enrollment increased...

Mindful Economics: The Production, Consumption, and Value of Beliefs

[Symposium: Motivated Beliefs]

By Roland Bénabou and Jean Tirole

Journal of Economic Perspectives, Summer 2016

In this paper, we provide a perspective into the main ideas and findings emerging from the growing literature on motivated beliefs and reasoning. This perspective emphasizes that beliefs often fulfill important psychological and functional needs of the in...

On Testing for Speculative Bubbles

[Symposium: Bubbles]

By Robert P. Flood and Robert J. Hodrick

Journal of Economic Perspectives, Spring 1990

The possibility that movements in prices could be due to the self-fulfilling prophecies of market participants has long intrigued observers of free markets. This paper surveys the current state of the empirically-oriented literature concerning rational dy...

Shifting Mandates: The Federal Reserve's First Centennial

By Carmen M. Reinhart and Kenneth S. Rogoff

American Economic Review, May 2013

The Federal Reserve's mandate has evolved considerably over the organization's hundred-year history. It was changed from an initial focus in 1913 on financial stability, to fiscal financing in World War II and its aftermath, to a strong anti-inflation foc...

Monopoly and the Incentive to Innovate When Adoption Involves Switchover Disruptions

By Thomas J. Holmes, David K. Levine, and James A. Schmitz

American Economic Journal: Microeconomics, August 2012

Arrow (1962) argued that since a monopoly restricts output relative to a competitive industry, it would be less willing to pay a fixed cost to adopt a new technology. We develop a new theory of why a monopolistic industry innovates less. Firms often face ...

Gender Differences in Salary and Promotion in the Humanities

By Donna K. Ginther and Kathy J. Hayes

American Economic Review, May 1999

Are Biofuels the Culprit? OPEC, Food, and Fuel

By Gal Hochman, Deepak Rajagopal, and David Zilberman

American Economic Review, May 2010

Aid under Fire: Development Projects and Civil Conflict

By Benjamin Crost, Joseph Felter, and Patrick Johnston

American Economic Review, June 2014

We estimate the causal effect of a large development program on conflict in the Philippines through a regression discontinuity design that exploits an arbitrary poverty threshold used to assign eligibility for the program. We find that barely eligible m...