From Micro to Macro via Production Networks

[Symposium: Social Networks]

By Vasco M. Carvalho

Journal of Economic Perspectives, Fall 2014

A modern economy is an intricately linked web of specialized production units, each relying on the flow of inputs from their suppliers to produce their own output which, in turn, is routed towards other downstream units. In this essay, I argue that this n...

Financial Innovation, Collateral, and Investment

By Ana Fostel and John Geanakoplos

American Economic Journal: Macroeconomics, January 2016

Financial innovations that change how promises are collateralized affect prices and investment, even in the absence of any change in fundamentals. In C-models, the ability to leverage an asset always generates overinvestment compared to Arrow-Debreu. Cred...

In the Name of the Son (and the Daughter): Intergenerational Mobility in the United States, 1850-1940

By Claudia Olivetti and M. Daniele Paserman

American Economic Review, August 2015

This paper estimates historical intergenerational elasticities between fathers and children of both sexes in the United States using a novel empirical strategy. The key insight of our approach is that the information about socioeconomic status conveyed by...

Asymmetric Information and Public Economics: The Mirrlees-Vickrey Nobel Prize

By Agnar Sandmo

Journal of Economic Perspectives, Winter 1999

This paper surveys the contributions of Nobel laureates James Mirrlees and William Vickrey to the study of asymmetric information in economics, particularly as they relate to problems in public economics. It discusses and interprets Mirrlees's work on opt...

Effects of Immigrant Legalization on Crime

By Scott R. Baker

American Economic Review, May 2015

I examine the effects that the 1986 Immigration Reform and Control Act (IRCA), which legalized almost 3 million immigrants, had on crime in the United States. I exploit the IRCA's quasi-random timing as well as geographic variation in the intensity of tre...

Child Benefit Support and Method of Payment: Evidence from a Randomized Experiment in Belgium

By Marieke Huysentruyt and Eva Lefevere

American Economic Journal: Economic Policy, May 2010

We examine the effects of information and information presentation format on individuals' choice of payment method in a large randomized experiment carried out with the Belgian National Office for Family Benefits. We find that a one-time mailing providing...

Price, Quality, and Variety: Measuring the Gains from Trade in Differentiated Products

By Gloria Sheu

American Economic Journal: Applied Economics, October 2014

This paper explores the gains from trade in differentiated products from three channels: decreases in price, improvements in quality, and increases in variety. Using data on Indian imports of computer printers from 1996 to 2005, a period of trade liber...

Detection, Identification, and Estimation of Loss Aversion: Evidence from an Auction Experiment

By A. Banerji and Neha Gupta

American Economic Journal: Microeconomics, February 2014

We provide a novel experimental auction design, in which (i) an exogenous decrease in the probability of winning, conditional on the bid, reduces the optimal bid of a loss averse agent whose reference point is expectations based; (ii) observed bid distri...

Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Goods Experiments

By Urs Fischbacher and Simon Gächter

American Economic Review, March 2010

One lingering puzzle is why voluntary contributions to public goods decline over time in experimental and real-world settings. We show that the decline of cooperation is driven by individual preferences for imperfect conditional cooperation. Many people's...

The Big Sort: College Reputation and Labor Market Outcomes

By W. Bentley MacLeod, Evan Riehl, Juan E. Saavedra, and Miguel Urquiola

American Economic Journal: Applied Economics, July 2017

We explore how college reputation affects the "big sort," the process by which students choose colleges and find their first jobs. We incorporate a simple definition of college reputation—graduates' mean admission scores—into a competitive lab...

Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate

By Michael J. Roberts and Wolfram Schlenker

American Economic Review, October 2013

We present a new framework to identify supply elasticities of storable commodities where past shocks are used as exogenous price shifters. In the agricultural context, past yield shocks change inventory levels and futures prices of agricultural commodi...

Bid Preference Programs and Participation in Highway Procurement Auctions

By Elena Krasnokutskaya and Katja Seim

American Economic Review, October 2011

We use data from highway procurement auctions subject to California's Small Business Preference program to study the effect of bid preferences on auction outcomes. Our analysis is based on an estimated model of firms' bidding and participation decisions,...

The Historical Fertility Transition: A Guide for Economists

By Timothy W. Guinnane

Journal of Economic Literature, September 2011

The historical fertility transition is the process by which much of Europe and North America went from high to low fertility in the nineteenth and early twentieth centuries. This transformation is central to recent accounts of long-run economic growth. P...

Zombie Lending and Depressed Restructuring in Japan

By Ricardo J. Caballero, Takeo Hoshi, and Anil K. Kashyap

American Economic Review, December 2008

Large Japanese banks often engaged in sham loan restructurings that kept credit flowing to otherwise insolvent borrowers (which we call zombies). We examine the implications of suppressing the normal competitive process whereby the zombies would shed w...

Technology and Child Development: Evidence from the One Laptop per Child Program

By Julian Cristia, Pablo Ibarrarán, Santiago Cueto, Ana Santiago, and Eugenio Severín

American Economic Journal: Applied Economics, July 2017

This paper presents results from a large-scale randomized evaluation of the One Laptop per Child program, using data collected after 15 months of implementation in 318 primary schools in rural Peru. The program increased the ratio of computers per student...

Which Dimensions of Culture Matter for Long-Run Growth?

By Yuriy Gorodnichenko and Gerard Roland

American Economic Review, May 2011

We present empirical evidence that, among a variety of cultural dimensions, the individualism-collectivism dimension, based on Hofstede's (2001) data, is the most important and robustly significant effect of culture on long run growth. Other dimensions th...

The Empirical Importance of Precautionary Saving

By Pierre-Olivier Gourinchas and Jonathan A. Parker

American Economic Review, May 2001

Compensation for State and Local Government Workers

By Maury Gittleman and Brooks Pierce

Journal of Economic Perspectives, Winter 2012

Are state and local government workers overcompensated? In this paper, we step back from the highly charged rhetoric and address this question with the two primary data sources for looking at compensation of state and local government workers: the Current...

Public Communication and Information Acquisition

By Ryan Chahrour

American Economic Journal: Macroeconomics, July 2014

This paper models the tradeoff, perceived by central banks and other public actors, between providing the public with useful information and the risk of overwhelming it with excessive communication. An information authority chooses how many signals to pro...

The Interest Rate Elasticity of Mortgage Demand: Evidence from Bunching at the Conforming Loan Limit

By Anthony A. DeFusco and Andrew Paciorek

American Economic Journal: Economic Policy, February 2017

This paper provides novel estimates of the interest rate elasticity of mortgage demand by measuring the degree of bunching in response to a discrete jump in interest rates at the conforming loan limit--the maximum loan size eligible for purchase by Fannie...