Retrospectives: Do Productive Recessions Show the Recuperative Powers of Capitalism? Schumpeter's Analysis of the Cleansing Effect

By Muriel Dal Pont Legrand and Harald Hagemann

Journal of Economic Perspectives, Winter 2017

Schumpeter has often been interpreted as a "liquidationist," someone who is convinced that economic crises are necessary and unavoidable, and thus that government nonintervention is a sound policy in such crises. The first two sections of this paper dis...

Psychology and the Market

By Edward L. Glaeser

American Economic Review, May 2004

Firm Size Distortions and the Productivity Distribution: Evidence from France

By Luis Garicano, Claire Lelarge, and John Van Reenen

American Economic Review, November 2016

We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies it to France where many labor laws start to bind on firms...

(Dis)organization and Success in an Economics MOOC

By Abhijit V. Banerjee and Esther Duflo

American Economic Review, May 2014

Massive Online Open Courses (MOOCs) present the potential to deliver high quality education to a large number of students. But they suffer from low completion rates. This paper identifies disorganization as a factor behind failure to complete a MOOC. Stud...

Selection in Insurance Markets: Theory and Empirics in Pictures

By Liran Einav and Amy Finkelstein

Journal of Economic Perspectives, Winter 2011

Government intervention in insurance markets is ubiquitous and the theoretical basis for such intervention, based on classic work from the 1970s, has been the problem of adverse selection. Over the last decade, empirical work on selection in insurance mar...

A Time-Series Analysis of Crime, Deterrence, and Drug Abuse in New York City

By Hope Corman and H. Naci Mocan

American Economic Review, June 2000

Star Wars: The Empirics Strike Back

By Abel Brodeur, Mathias Lé, Marc Sangnier, and Yanos Zylberberg

American Economic Journal: Applied Economics, January 2016

Using 50,000 tests published in the AER, JPE, and QJE, we identify a residual in the distribution of tests that cannot be explained solely by journals favoring rejection of the null hypothesis. We observe a two-humped camel shape with missing p-values bet...

From Peer Pressure to Biased Norms

By Moti Michaeli and Daniel Spiro

American Economic Journal: Microeconomics, February 2017

This paper studies a coordination game between a continuum of players with heterogeneous tastes who perceive peer pressure when behaving differently from each other. It characterizes the conditions under which a social norm--a mode of behavior followed by...

The Stock Market and Capital Accumulation

By Robert E. Hall

American Economic Review, December 2001

The value of a firm's securities measures the value of the firm's productive assets. If the assets include only capital goods and not a permanent monopoly franchise, the value of the securities measures the value of the capital. Finally, if the price of t...

Will the Sovereign Debt Market Survive?

By Andrei Shleifer

American Economic Review, May 2003

Parental Job Loss and Children's Long-Term Outcomes: Evidence from 7 Million Fathers' Layoffs

By Nathaniel G. Hilger

American Economic Journal: Applied Economics, July 2016

How do parental layoffs and their large attendant income losses affect children's long-term outcomes? This question has proven difficult to answer due to the endogeneity of parental layoffs. I overcome this problem by exploiting the timing of 7 million fa...

Managing Conflicts in Relational Contracts

By Jin Li and Niko Matouschek

American Economic Review, October 2013

A manager and a worker are in an infinitely repeated relationship in which the manager privately observes her opportunity costs of paying the worker. We show that the optimal relational contract generates periodic conflicts during which effort and expe...

Identity Economics 2016: Where Do Social Distinctions and Norms Come From?

By Rachel E. Kranton

American Economic Review, May 2016

Identity economics provides a framework to analyze economic outcomes by establishing people's identities--not just pecuniary incentives--as primary motivations for choice. The heart of the framework is social difference and norms. This paper engages the e...

Entropy and the Value of Information for Investors

By Antonio Cabrales, Olivier Gossner, and Roberto Serrano

American Economic Review, February 2013

Consider an investor who fears ruin when facing investments that satisfy no-arbitrage. Before investing he can purchase information about the state of nature as an information structure. Given his prior, information structure α investment dominat...

Self-Fulfilling Risk Panics

By Philippe Bacchetta, Cédric Tille, and Eric van Wincoop

American Economic Review, December 2012

Recent crises have seen large spikes in asset price risk. We propose an explanation for such panics based on self-fulfilling shifts in beliefs about risk. A negative link between the current level and the future risk of an asset price leads to a circular ...

Grade Information and Grade Inflation: The Cornell Experiment

[Symposium: Grade Differences and Inflation]

By Talia Bar, Vrinda Kadiyali, and Asaf Zussman

Journal of Economic Perspectives, Summer 2009

Grade inflation and high grade levels have been subjects of concern and public debate in recent decades. In the mid-1990s, Cornell University's Faculty Senate had a number of discussions about grade inflation and what might be done about it. In April 1996...

The War on Drugs: Methamphetamine, Public Health, and Crime

By Carlos Dobkin and Nancy Nicosia

American Economic Review, March 2009

In mid-1995, a government effort to reduce the supply of methamphetamine precursors successfully disrupted the methamphetamine market and interrupted a trajectory of increasing usage. The price of methamphetamine tripled and purity declined from 90 per...

Do Wealth Fluctuations Generate Time-Varying Risk Aversion? Micro-evidence on Individuals

By Markus K. Brunnermeier and Stefan Nagel

American Economic Review, June 2008

We use data from the Panel Study of Income Dynamics to investigate how households portfolio allocations change in response to wealth fluctuations. Persistent habits, consumption commitments, and subsistence levels can generate time-varying risk aversio...

A Sociological Perspective on Gender and Career Outcomes

[Symposium: Sociology and Economics]

By Barbara F. Reskin and Denise D. Bielby

Journal of Economic Perspectives, Winter 2005

Powering Up China: Income Distributions and Residential Electricity Consumption

By Maximilian Auffhammer and Catherine D. Wolfram

American Economic Review, May 2014

Current forecasts suggest that the vast majority of growth in energy demand will come from the developing world, and that China will play a major part in that growth. This paper presents evidence suggesting that the shape of the income distribution, which...