Adverse Selection and an Individual Mandate: When Theory Meets Practice

By Martin B. Hackmann, Jonathan T. Kolstad, and Amanda E. Kowalski

American Economic Review, March 2015

We develop a model of selection that incorporates a key element of recent health reforms: an individual mandate. Using data from Massachusetts, we estimate the parameters of the model. In the individual market for health insurance, we find that premiums a...

Achievement Goals, Locus of Control, and Academic Success in Economics

By Lester Hadsell

American Economic Review, May 2010

A Comprehensive Approach to Revealed Preference Theory

By Hiroki Nishimura, Efe A. Ok, and John K.-H. Quah

American Economic Review, April 2017

We develop a version of Afriat's theorem that is applicable in a variety of choice environments beyond the setting of classical consumer theory. This allows us to devise tests for rationalizability in environments where the set of alternatives is not the ...

The Shrinking Medicare Part D Benefit: Comment

By Carl Johnston

Journal of Economic Perspectives, Fall 2009

Austrian and Neoclassical Economics: Any Gains from Trade?

By Sherwin Rosen

Journal of Economic Perspectives, Fall 1997

The systems aspects of Austrian economic thought pertaining to the process of competition deserve a prominent place in modern economic thinking. The paper develops the differences between the Austrian view of competition as an evolutionary process, and th...

What Do We Say about Ourselves and What Does It Mean? Yet Another Look at Economics Department Research

By Jerry G. Thursby

Journal of Economic Literature, June 2000

Statistical and programming techniques are used to examine economics department quality rankings and how resources and research output are related. Four questions are asked using the National Research Council's 1993 survey. Are there significant differenc...

Is There a Bias toward Excess in U.S. Government Budgets or Deficits?

[Symposium: Bias in the Budget]

By Charles L. Schultze

Journal of Economic Perspectives, Spring 1992

Do the political institutions of a majoritarian representative democracy, and in particular those of the United States, systematically produce either levels of public spending or budget deficits that are excessive? Should U.S. political institutions be al...

Credit Traps and Credit Cycles

By Kiminori Matsuyama

American Economic Review, March 2007

We develop a simple macroeconomic model of credit market imperfections with heterogeneous investment projects. The projects differ in productivity, the investment requirement, and the severity of agency problems behind the borrowing constraints. A movemen...

Real Rigidity, Nominal Rigidity, and the Social Value of Information

By George-Marios Angeletos, Luigi Iovino, and Jennifer La'O

American Economic Review, January 2016

Does welfare improve when firms are better informed about the state of the economy and can thus better coordinate their production and pricing decisions? We address this question in an elementary business-cycle model that highlights how the dispersion of ...

Dynamic Signaling with Dropout Risk

By Francesc Dilmé and Fei Li

American Economic Journal: Microeconomics, February 2016

We study the role of dropout risk in dynamic signaling. A seller privately knows the quality of an indivisible good and decides when to trade. In each period, he may draw a dropout shock that forces him to trade immediately. To avoid costly delay, the sel...

Falling Dominoes: A Theory of Rare Events and Crisis Contagion

By Heng Chen and Wing Suen

American Economic Journal: Microeconomics, February 2016

Crises, such as revolutions and currency attacks, rarely occur; but when they do they typically arrive in waves. The rarity of crises is an important contagion mechanism in a multiple-country dynamic global game model. When players are uncertain about the...

Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth

By Samuel Bazzi and Michael A. Clemens

American Economic Journal: Macroeconomics, April 2013

Concern has intensified in recent years that many instrumental variables used in widely-cited growth regressions may be invalid, weak, or both. Attempts to remedy this general problem remain inadequate. We show how a range of published studies can offer m...

Heterogeneity and Aggregation: Implications for Labor-Market Fluctuations: Reply

By Yongsung Chang and Sun-Bin Kim

American Economic Review, April 2014

Takahashi (2014) has uncovered coding errors in our paper, Chang and Kim (2007)-henceforth, CK. We acknowledge and are embarrassed by these mistakes. We are grateful to Takahashi for uncovering them. While the correction decreases the volatility of the...

Evidence on Discrimination in Employment: Codes of Color, Codes of Gender

[Symposium: Discrimination in Product, Credit and Labor Markets]

By William A. Darity and Patrick L. Mason

Journal of Economic Perspectives, Spring 1998

There is substantial racial and gender disparity in the American economy. As we will demonstrate, discriminatory treatment within the labor market is a major cause of this inequality. Yet, there appear to have been particular periods in which racial minor...

Evaluating US Fuel Economy Standards in a Model with Producer and Household Heterogeneity

By Mark R. Jacobsen

American Economic Journal: Economic Policy, May 2013

This paper employs an empirically estimated model to study the equilibrium effects of an increase in the US corporate average fuel economy (CAFE) standards. I identify and model heterogeneity across firms and find that the profit impacts of CAFE fall alm...

Asymmetric Information and Intermediation Chains

By Vincent Glode and Christian Opp

American Economic Review, September 2016

We propose a parsimonious model of bilateral trade under asymmetric information to shed light on the prevalence of intermediation chains that stand between buyers and sellers in many decentralized markets. Our model features a classic problem in economics...

New Trade Models, New Welfare Implications

By Marc J. Melitz and Stephen J. Redding

American Economic Review, March 2015

We show that endogenous firm selection provides a new welfare margin for heterogeneous firm models of trade (relative to homogeneous firm models). Under some parameter restrictions, the trade elasticity is constant and is a sufficient statistic for welfar...

Learning from Others? Decision Rights, Strategic Communication, and Reputational Concerns

By Otto H. Swank and Bauke Visser

American Economic Journal: Microeconomics, November 2015

We examine centralized versus decentralized decision making when experience of agents is private information and communication is necessary to learn from others. An agent has reputational concerns and his market may or may not observe what the other agent...

From State to Market: A Survey of Empirical Studies on Privatization

By William L. Megginson and Jeffry M. Netter

Journal of Economic Literature, June 2001

This study surveys the literature examining the privatization of state-owned enterprises (SOEs) We review the history of privatization, the theoretical and empirical evidence on the relative performance of state owned and privately owned firms, the types ...

Correlation Neglect, Voting Behavior, and Information Aggregation

By Gilat Levy and Ronny Razin

American Economic Review, April 2015

In this paper we analyze elections when voters underestimate the correlation between their information sources ("correlation neglect"). We find that this cognitive bias can improve political outcomes. We show that the extreme beliefs which result from cor...