The Role of Dynamic Scoring in the Federal Budget Process: Closing the Gap between Theory and Practice

By Rosanne Altshuler, Nicholas Bull, John Diamond, Tim Dowd, and Pamela Moomau

American Economic Review, May 2005

Academic Journal Pricing and the Demand of Libraries

By Aviv Nevo, Daniel L. Rubinfeld, and Mark McCabe

American Economic Review, May 2005

Open Access and Academic Journal Quality

By Mark J. McCabe and Christopher M. Snyder

American Economic Review, May 2005

Information on the Association

American Economic Review, May 2005

Are Two Heads Better Than One? Team versus Individual Play in Signaling Games

By David J. Cooper and John H. Kagel

American Economic Review, June 2005

We compare individuals with two-person teams in signaling game experiments. Teams consistently play more strategically than individuals and generate positive synergies in more difficult games, beating a demanding "truth-wins" norm. The superior performanc...

Sunspots in the Laboratory

By John Duffy and Eric O'N. Fisher

American Economic Review, June 2005

We show that extrinsic or nonfundamental uncertainty influences markets in a controlled environment. This work provides the first direct evidence of sunspot equilibria. These equilibria require a common understanding of the semantics of the sunspot variab...

The Variety and Quality of a Nation's Exports

By David Hummels and Peter J. Klenow

American Economic Review, June 2005

Large economies export more in absolute terms than do small economies. We use data on shipments by 126 exporting countries to 59 importing countries in 5,000 product categories to answer the question: How? Do big economies export larger quantities of each...

Understanding European Real Exchange Rates

By Mario J. Crucini, Chris I. Telmer, and Marios Zachariadis

American Economic Review, June 2005

We study good-by-good deviations from the Law-of-One-Price (LOP) for over 1,800 retail goods and services between all European Union (EU) countries for the years 1975, 1980, 1985, and 1990. We find that for each of these years, after we control for differ...

House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle

By Matteo Iacoviello

American Economic Review, June 2005

I develop and estimate a monetary business cycle model with nominal loans and collateral constraints tied to housing values. Demand shocks move housing and nominal prices in the same direction, and are amplified and propagated over time. The financial acc...

Matching with Contracts

By John William Hatfield and Paul R. Milgrom

American Economic Review, September 2005

We develop a model of matching with contracts which incorporates, as special cases, the college admissions problem, the Kelso-Crawford labor market matching model, and ascending package auctions. We introduce a new "law of aggregate demand" for the case o...

Bidding with Securities: Auctions and Security Design

By Peter M. DeMarzo, Ilan Kremer, and Andrzej Skrzypacz

American Economic Review, September 2005

We study security-bid auctions in which bidders compete for an asset by bidding with securities whose payments are contingent on the asset's realized value. In formal security-bid auctions, the seller restricts the security design to an ordered set and us...

Fairness and Redistribution

By Alberto Alesina and George-Marios Angeletos

American Economic Review, September 2005

Different beliefs about the fairness of social competition and what determines income inequality influence the redistributive policy chosen in a society. But the composition of income in equilibrium depends on tax policies. We show how the interaction bet...

The Political Economy of Corporate Governance

By Marco Pagano and Paolo F. Volpin

American Economic Review, September 2005

We analyze the political determinants of investor and employment protection. Our model predicts that proportional electoral systems are conducive to weaker investor protection and stronger employment protection than majoritarian systems. This prediction i...

The Market for News

By Sendhil Mullainathan and Andrei Shleifer

American Economic Review, September 2005

We investigate the market for news under two assumptions: that readers hold beliefs which they like to see confirmed, and that newspapers can slant stories toward these beliefs. We show that, on the topics where readers share common beliefs, one should no...

Incomplete Contracts and the Product Cycle

By Pol Antràs

American Economic Review, September 2005

I present a model in which the incomplete nature of contracts governing international transactions limits the extent to which the production process can be fragmented across borders. Because of contractual frictions, goods are initially manufactured in th...

Secrecy and Safety

By Andrew F. Daughety and Jennifer F. Reinganum

American Economic Review, September 2005

We provide a model showing that the use of confidential settlement as a strategy for a firm facing tort litigation leads to lower average safety of products sold than would occur if the firm were committed to openness. A rational risk-neutral consumer's r...

Optimal Expectations

By Markus K. Brunnermeier and Jonathan A. Parker

American Economic Review, September 2005

Forward-looking agents care about expected future utility flows, and hence have higher current felicity if they are optimistic. This paper studies utility-based biases in beliefs by supposing that beliefs maximize average felicity, optimally balancing thi...

Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan

By Joe Peek and Eric S. Rosengren

American Economic Review, September 2005

We examine the misallocation of credit in Japan associated with the perverse incentives faced by banks to provide additional credit to the weakest firms. Firms are more likely to receive additional bank credit if they are in poor financial condition, beca...

History, Institutions, and Economic Performance: The Legacy of Colonial Land Tenure Systems in India

By Abhijit Banerjee and Lakshmi Iyer

American Economic Review, September 2005

We analyze the colonial land revenue institutions set up by the British in India, and show that differences in historical property rights institutions lead to sustained differences in economic outcomes. Areas in which proprietary rights in land were histo...

The Central Role of Noise in Evaluating Interventions That Use Test Scores to Rank Schools

By Kenneth Y. Chay, Patrick J. McEwan, and Miguel Urquiola

American Economic Review, September 2005

Many programs reward or penalize schools based on students' average performance. Mean reversion is a potentially serious hindrance to the evaluation of such interventions. Chile's 900 Schools Program (P-900) allocated resources based on cutoffs in schools...