Mechanism Experiments and Policy Evaluations

[Symposium: Field Experiments]

By Jens Ludwig, Jeffrey R. Kling, and Sendhil Mullainathan

Journal of Economic Perspectives, Summer 2011

Randomized controlled trials are increasingly used to evaluate policies. How can we make these experiments as useful as possible for policy purposes? We argue greater use should be made of experiments that identify the behavioral mechanisms that are centr...

Reconsidering the poverty line

[Research Highlight]

November 30, 2017

Is the World Bank underestimating the minimum income needed to survive?

Some Evidence on the Importance of Sticky Wages

By Alessandro Barattieri, Susanto Basu, and Peter Gottschalk

American Economic Journal: Macroeconomics, January 2014

We present evidence on the frequency of nominal wage adjustment using SIPP data adjusted for measurement error. The SIPP is a representative sample of the US population. Our main results are: (i) The average quarterly probability of a nominal wage chan...

Information Technology and the U.S. Economy

By Dale W. Jorgenson

American Economic Review, March 2001

Capital Flows and Macroeconomic Performance: Lessons from the Golden Era of International Finance

By Lee E. Ohanian and Mark L. J. Wright

American Economic Review, May 2010

Bargaining with Deadlines and Private Information

By William Fuchs and Andrzej Skrzypacz

American Economic Journal: Microeconomics, November 2013

We study dynamic bargaining with private information and a deadline. As commitment power disappears, there is a clear "deadline effect." That is, trade takes place smoothly before the deadline and with an atom right at the deadline. Prices, timing of t...

Monetary Policy, Judgment, and Near-Rational Exuberance

By James Bullard, George W. Evans, and Seppo Honkapohja

American Economic Review, June 2008

We study how the use of judgment or "add-factors" in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We examine the possibility of a new phenomenon, which we call exuberance equilibria, in t...

The Federal Reserve and Panic Prevention: The Roles of Financial Regulation and Lender of Last Resort

[Symposium: The First 100 Years of the Federal Reserve]

By Gary Gorton and Andrew Metrick

Journal of Economic Perspectives, Fall 2013

This paper surveys the role of the Federal Reserve within the financial regulatory system, with particular attention to the interaction of the Fed's role as both a supervisor and a lender-of-last-resort. The institutional design of the Federal Reserve S...

The Roles of the State and the Market in Establishing Property Rights

[Symposium: Transition from Socialism]

By Andrzej Rapaczynski

Journal of Economic Perspectives, Spring 1996

Using the experiences of Eastern Europe as an example, this article argues that, contrary to the economists' assumption that property rights are a precondition of a market economy, market institutions are often a prerequisite for a viable private property...

Overconfident Investors, Predictable Returns, and Excessive Trading

[Symposium: Overconfidence]

By Kent Daniel and David Hirshleifer

Journal of Economic Perspectives, Fall 2015

The last several decades have witnessed a shift away from a fully rational paradigm of financial markets toward one in which investor behavior is influenced by psychological biases. Two principal factors have contributed to this evolution: a body of...

State and Development: The Need for a Reappraisal of the Current Literature

By Pranab Bardhan

Journal of Economic Literature, September 2016

This essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible ...

Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures

By Toke S. Aidt and Julia Shvets

American Economic Journal: Economic Policy, August 2012

We study the effect of electoral incentives on the allocation of public services across legislative districts. We develop a model in which elections encourage legislators to cater to parochial interests and thus aggravate the common pool problem. Using u...

Sovereign Default Risk and Uncertainty Premia

By Demian Pouzo and Ignacio Presno

American Economic Journal: Macroeconomics, July 2016

This paper studies how international investors' concerns about model misspecification affect sovereign bond spreads. We develop a general equilibrium model of sovereign debt with endogenous default wherein investors fear that the probability model of the ...

Long Run Risk, the Wealth-Consumption Ratio, and the Temporal Pricing of Risk

By Ralph S. J. Koijen, Hanno Lustig, Stijn Van Nieuwerburgh, and Adrien Verdelhan

American Economic Review, May 2010

Mechanism Design: How to Implement Social Goals

By Eric S. Maskin

American Economic Review, June 2008

Slow Moving Capital

By Mark Mitchell, Lasse Heje Pedersen, and Todd Pulvino

American Economic Review, May 2007

Fiscal Policy and Economic Recovery: The Case of the 1936 Veterans' Bonus

By Joshua K. Hausman

American Economic Review, April 2016

Conventional wisdom has it that in the 1930s fiscal policy did not work because it was not tried. This paper shows that fiscal policy was tried in 1936. The veterans' bonus of 1936 paid 2 percent of GDP to 3.2 million veterans; the typical veteran rece...

Too-Systemic-to-Fail: What Option Markets Imply about Sector-Wide Government Guarantees

By Bryan Kelly, Hanno Lustig, and Stijn Van Nieuwerburgh

American Economic Review, June 2016

We examine the pricing of financial crash insurance during the 2007-2009 financial crisis in US option markets, and we show that a large amount of aggregate tail risk is missing from the cost of financial sector crash insurance during the crisis. The diff...

Are Preferential Trading Arrangements Trade-Liberalizing or Protectionist?

By Anne O. Krueger

Journal of Economic Perspectives, Fall 1999

Preferential trade arrangements, and especially free trade agreements, have mushroomed in importance in the 1990s. This has revived research on the effects of these arrangements, both on the welfare of the member countries and those excluded, and on the m...

Immigration Policy and Immigrant Quality: The Australian Points System

By Paul W. Miller

American Economic Review, May 1999