Famous First Bubbles

[Symposium: Bubbles]

By Peter M. Garber

Journal of Economic Perspectives, Spring 1990

Before economists relegate a speculative event to the inexplicable or bubble category, we must exhaust all reasonable economic explanations. Among the "reasonable" or "market fundamental" explanations I would include the perception of an increased probabi...

Do Employer Pension Contributions Reflect Employee Preferences? Evidence from a Retirement Savings Reform in Denmark

By Itzik Fadlon, Jessica Laird, and Torben Heien Nielsen

American Economic Journal: Applied Economics, July 2016

This paper studies how firms set contributions to employer provided 401(k)-type pension plans. Using a reform that decreased the subsidy to contributions to capital pension accounts for Danish workers in the top income tax bracket, we provide strong evide...

An Introduction to the Wage Curve

By David G. Blanchflower and Andrew J. Oswald

Journal of Economic Perspectives, Summer 1995

This paper documents a statistical regulatity or law. It shows that there exists a downward-sloping curve linking the level of a worker's pay to the unemployment rate in the worker's region. The same curve can be found in microeconomic data sets from sixt...

Automobiles on Steroids: Product Attribute Trade-Offs and Technological Progress in the Automobile Sector

By Christopher R. Knittel

American Economic Review, December 2011

This paper estimates the technological progress that has occurred since 1980 in the automobile industry and the trade-offs faced when choosing between fuel economy, weight, and engine power characteristics. The results suggest that if weight, horsepower, ...

Economic History or History of Economics? Grand Pursuit: The Story of Economic Genius: Review Essay

By Orley Ashenfelter

Journal of Economic Literature, March 2012

In this essay, I review Sylvia Nasar's long awaited new history of economics, Grand Pursuit: The Story of Economic Genius. I describe how the book is an economic history of the period 1850-1950, with distinguished economists' stories inserted in ...

Consumption Disasters in the Twentieth Century

By Robert J. Barro and Jose F. Ursua

American Economic Review, May 2008

Overconfidence, Insurance, and Paternalism

By Alvaro Sandroni and Francesco Squintani

American Economic Review, December 2007

It is well known that when agents are fully rational, compulsory public insurance may make all agents better off in the Rothschild and Stiglitz (1976) model of insurance markets. We find that when sufficiently many agents underestimate their personal ri...

Married with Children: A Collective Labor Supply Model with Detailed Time Use and Intrahousehold Expenditure Information

By Laurens Cherchye, Bram De Rock, and Frederic Vermeulen

American Economic Review, December 2012

We propose a collective labor supply model with household production that generalizes a model of Blundell, Chiappori, and Meghir (2005). Adults' preferences depend not only on own leisure and individual private consumption of market goods. They also dep...

What Have We Learned from Structural Models?

By Richard Blundell

American Economic Review, May 2017

A structural economic model is one where the structure of decision making is incorporated in the model specification. Structural models aim to identify three distinct, but related, objects: (i) structural "deep" parameters; (ii) underlying mechanisms; (ii...

A Proposal to Organize and Promote Replications

By Lucas C. Coffman, Muriel Niederle, and Alistair J. Wilson

American Economic Review, May 2017

We make a two-pronged proposal to (i) strengthen the incentives for replication work and (ii) better organize and draw attention to the replications that are conducted. First we propose that top journals publish short "replication reports." These reports ...

Do Prices and Attributes Explain International Differences in Food Purchases?

By Pierre Dubois, Rachel Griffith, and Aviv Nevo

American Economic Review, March 2014

Food purchases differ substantially across countries. We use detailed household level data from the US, France and the UK to (i) document these differences; (ii) estimate a demand system for food and nutrients, and (iii) simulate counterfactual choices ...

The Minimum Legal Drinking Age and Public Health

By Christopher Carpenter and Carlos Dobkin

Journal of Economic Perspectives, Spring 2011

The Amethyst Initiative, signed by more than 100 college presidents and other higher education officials calls for a reexamination of the minimum legal drinking age in the United States. A central argument of the initiative is that the U.S. minimum legal ...

Fuel Economy and Safety: The Influences of Vehicle Class and Driver Behavior

By Mark R. Jacobsen

American Economic Journal: Applied Economics, July 2013

Fuel economy standards change the composition of the vehicle fleet, influencing accident safety. The direction and size of the effect depend on the combination of vehicles in the fleet. I provide empirical estimates of vehicle safety across classes, ac...

The Impact of Maternal Literacy and Participation Programs: Evidence from a Randomized Evaluation in India

By Rukmini Banerji, James Berry, and Marc Shotland

American Economic Journal: Applied Economics, October 2017

Using a randomized field experiment in India, we evaluate the effectiveness of adult literacy and parental involvement interventions in improving children's learning. Households were assigned to receive either adult literacy (language and math) classes fo...

Ensuring Sales: A Theory of Inter-firm Credit

By Arup Daripa and Jeffrey Nilsen

American Economic Journal: Microeconomics, February 2011

We propose a simple theory to account for the prevalence of interfirm credit at an interest rate of zero. A downstream firm trades off inventory holding costs against lost sales. Lost final sales impose a negative externality on the upstream firm. The sol...

Allowing the Data to Speak Freely: The Macroeconometrics of the Cointegrated Vector Autoregression

By Kevin D. Hoover, Soren Johansen, and Katarina Juselius

American Economic Review, May 2008

Behavioral Economics and Public Policy: A Pragmatic Perspective

By Raj Chetty

American Economic Review, May 2015

The debate about behavioral economics—the incorporation of insights from psychology into economics—is often framed as a question about the foundational assumptions of economic models. This paper presents a more pragmatic perspective on behavio...

Are You Sure You're Saving Enough for Retirement?

[Symposium: The Adequacy of Retirement Saving]

By Jonathan Skinner

Journal of Economic Perspectives, Summer 2007

Many view the soon-to-retire Baby Boomers as woefully unprepared for their golden years, while other economists have taken a more sanguine view of American levels of saving. And if Americans are failures at saving enough for retirement, why are some retir...

Does the Classic Microfinance Model Discourage Entrepreneurship among the Poor? Experimental Evidence from India

By Erica Field, Rohini Pande, John Papp, and Natalia Rigol

American Economic Review, October 2013

Do the repayment requirements of the classic microfinance contract inhibit investment in high-return but illiquid business opportunities among the poor? Using a field experiment, we compare the classic contract which requires that repayment begin immed...

The American Family and Family Economics

[Symposium: Household Economics]

By Shelly Lundberg and Robert A. Pollak

Journal of Economic Perspectives, Spring 2007

Gary Becker's path-breaking Treatise on the Family (1981) subjected individuals' decisions about sex, marriage, childbearing, and childrearing to rational choice analysis. The American family has changed radically in recent decades; we survey these change...