Fiscal Imbalances and Borrowing Costs: Evidence from State Investment Losses

By Robert Novy-Marx and Joshua D. Rauh

American Economic Journal: Economic Policy, May 2012

During the last quarter of 2008, financial losses in state pension funds varied from 12 percent to 68 percent of the revenue generated by the state government. We quantify a sovereign default channel in the state municipal market by examining how changes ...

Limited-Purpose Banking--Moving from "Trust Me" to "Show Me" Banking

By Christophe Chamley, Laurence J. Kotlikoff, and Herakles Polemarchakis

American Economic Review, May 2012

There are many alleged culprits for the bank runs of 2008 and their devastating economic fallout. But proprietary information and leverage top our list. Claims of proprietary information forced financial markets to operate on trust, while providing the p...

Takings, Compensation and Endangered Species Protection on Private Lands

[Symposium: Endangered Species Act]

By Robert Innes, Stephen Polasky, and John Tschirhart

Journal of Economic Perspectives, Summer 1998

Preserving endangered species on private land benefits the public, but may confer cost on landowners if property is 'taken.' Government compensation to landowners can offset costs, although the Endangered Species Act does not require compensation. The aut...

The Future of US Economic Growth

By John G. Fernald and Charles I. Jones

American Economic Review, May 2014

Modern growth theory suggests that more than three-quarters of growth since 1950 reflects rising educational attainment and research intensity. As these transition dynamics fade, US economic growth is likely to slow at some point. However, the rise of Chi...

Taxpayer Search for Information: Implications for Rational Attention

By Jeffrey L. Hoopes, Daniel H. Reck, and Joel Slemrod

American Economic Journal: Economic Policy, August 2015

We examine data on capital-gains-tax-related information search to determine when and how taxpayers acquire information. We find seasonal increases in information search around tax deadlines, suggesting that taxpayers seek information to comply with tax l...

Ostracism and Forgiveness

By S. Nageeb Ali and David A. Miller

American Economic Review, August 2016

Many communities rely upon ostracism to enforce cooperation: if an individual shirks in one relationship, her innocent neighbors share information about her guilt in order to shun her, while continuing to cooperate among themselves. However, a strategic v...

Anatomy of a Contract Change

By Rajshri Jayaraman, Debraj Ray, and Francis de Véricourt

American Economic Review, February 2016

We study a contract change for tea pluckers on an Indian plantation, with a higher government-stipulated baseline wage. Incentive piece rates were lowered or kept unchanged. Yet, in the following month, output increased by 20 to 80 percent. This response ...

Misselling through Agents

By Roman Inderst and Marco Ottaviani

American Economic Review, June 2009

This paper analyzes the implications of the inherent conflict between two tasks performed by direct marketing agents: prospecting for customers and advising on the product's "suitability" for the specific needs of customers. When structuring salesforce...

Fairness and Redistribution: Comment

By Rafael Di Tella and Juan Dubra

American Economic Review, February 2013

We provide an example that shows that in the Alesina and Angeletos (2005) model one can obtain multiplicity even if luck plays no role in the economy. Thus, it is not critical that the noise to signal ratio be increasing in taxes, or that desired taxes ar...

Hospital Choices, Hospital Prices, and Financial Incentives to Physicians

By Kate Ho and Ariel Pakes

American Economic Review, December 2014

We estimate an insurer-specific preference function which rationalizes hospital referrals for privately insured births in California. The function is additively separable in: a hospital price paid by the insurer, the distance traveled, and plan- and se...

Sweetening the Deal? Political Connections and Sugar Mills in India

By Sandip Sukhtankar

American Economic Journal: Applied Economics, July 2012

Political control of firms is prevalent across the world. Evidence suggests that firms profit from political connections, and politicians derive benefit from control over firms. This paper investigates an alternative mechanism through which politicians ma...

Financial Education and Timely Decision Support: Lessons from Junior Achievement

By Bruce Ian Carlin and David T. Robinson

American Economic Review, May 2012

Using data from a finance theme park at Junior Achievement of Southern California, we explore how timely decision support is impacted by previous exposure to financial education. Some students received a 19-hour curriculum before participating, and some d...

Legal Status and the Criminal Activity of Immigrants

By Giovanni Mastrobuoni and Paolo Pinotti

American Economic Journal: Applied Economics, April 2015

We exploit exogenous variation in legal status following the January 2007 European Union enlargement to estimate its effect on immigrant crime. We difference out unobserved time-varying factors by (i) comparing recidivism rates of immigrants from the "new...

Institutions

By Douglass C. North

Journal of Economic Perspectives, Winter 1991

Institutions are the humanly devised constraints that structure political, economic, and social interaction. They consist of both informal constraints (sanctions, taboos, customs, traditions, and codes of conduct), and formal rules (constitutions, laws, p...

Evolving Choice Inconsistencies in Choice of Prescription Drug Insurance

By Jason Abaluck and Jonathan Gruber

American Economic Review, August 2016

We study choice over prescription insurance plans by the elderly using government administrative data to evaluate how these choices evolve over time. We find large "foregone savings" from not choosing the lowest cost plan that has grown over time. We deve...

Assessing Financial Education: Evidence from Boot Camp

By William Skimmyhorn

American Economic Journal: Economic Policy, May 2016

This study estimates the effects of Personal Financial Management Course attendance and enrollment assistance using a natural experiment in the US Army. New enlistees' course attendance reduces the probability of having credit account balances, average...

Speculative Growth: Hints from the U.S. Economy

By Ricardo J. Caballero, Emmanuel Farhi, and Mohamad L. Hammour

American Economic Review, September 2006

We propose a framework for understanding episodes of vigorous economic expansion and extreme asset valuations. We interpret this phenomenon as a highvaluation equilibrium with a low cost of capital based on optimism about future funding. The key ingred...

Firm-Level Heterogeneous Productivity and Demand Shocks: Evidence from Bangladesh

By Hiau Looi Kee and Kala Krishna

American Economic Review, May 2008

A Review of Geoffrey M. Hodgson, Conceptualizing Capitalism: Institutions, Evolution, Future

By Susan Rose-Ackerman

Journal of Economic Literature, March 2017

Capitalism and law go together in Geoffrey M. Hodgson's comprehensive analysis of the intellectual history and practical development of the capitalist system in Western Europe and North America. Given the breadth and depth of Professor Hodgson's reading i...

Strategic Information Acquisition and Transmission

By Rossella Argenziano, Sergei Severinov, and Francesco Squintani

American Economic Journal: Microeconomics, August 2016

This paper explores the implications of costly information acquisition in a strategic communication setting. We show that equilibrium decisions based on a biased expert's advice may be more precise than when information is directly acquired by the decisio...