Discrete Pricing and Market Fragmentation: A Tale of Two-Sided Markets

By Yong Chao, Chen Yao, and Mao Ye

American Economic Review, May 2017

Security trading now fragments into more than ten almost identical stock exchanges in the United States. We show that discrete pricing is one economic force that prevents the consolidation of trading volume. The uniform one-cent tick size (minimum price v...

Economic Theories of Legal Liability

[Symposium: The Economics of Liability]

By Robert D. Cooter

Journal of Economic Perspectives, Summer 1991

This essay synthesizes and re-conceptualizes some central results of the economic analysis of liability law and sketches the legal details that drive them. Three different legal mechanisms for creating efficient incentives are examined in turn. The first ...

Productivity Puzzles and R&D: Another Nonexplanation

[Symposium: The Slowdown in Productivity Growth]

By Zvi Griliches

Journal of Economic Perspectives, Fall 1988

Around 1974-75, output growth and associated productivity measures dropped sharply in the United States and in most other western industrialized nations and continued at rather low rates for most of the rest of the 1970s. During the late 1960s, the growth...

Economic Growth with Bubbles

By Alberto Martin and Jaume Ventura

American Economic Review, October 2012

We develop a stylized model of economic growth with bubbles in which changes in investor sentiment lead to the appearance and collapse of macroeconomic bubbles or pyramid schemes. These bubbles mitigate the effects of financial frictions. During bubbly ep...

Efficiency in Auctions with Private and Common Values: An Experimental Study

By K. Goeree and Theo Offerman

American Economic Review, June 2002

Auctions are generally not efficient when the object's expected value depends on private and common value information. We report a series of first-price auction experiments to measure the degree of inefficiency that occurs with financially motivated bidde...

Keynesian Macroeconomics without the LM Curve

By David H. Romer

Journal of Economic Perspectives, Spring 2000

Changes in both the macroeconomy and in macroeconomics suggest that the IS-LM-AS model is no longer the best baseline model of short-run fluctuations for teaching and policy analysis. This paper presents an alternative model that replaces the assumption t...

Asset Prices and Institutional Investors

By Suleyman Basak and Anna Pavlova

American Economic Review, August 2013

We consider an economy populated by institutional investors alongside standard retail investors. Institutions care about their performance relative to a certain index. Our framework is tractable, admitting exact closed-form expressions, and produces th...

Distinguishing Informational Cascades from Herd Behavior in the Laboratory

By Boğaçhan Çelen and Shachar Kariv

American Economic Review, June 2004

This paper reports an experimental test of how individuals learn from the behavior of others. By using techniques only available in the laboratory, we elicit subjects' beliefs. This allows us to distinguish informational cascades from herd behavior. By ad...

The Mechanism Is Truthful, Why Aren't You?

By Avinatan Hassidim, Déborah Marciano, Assaf Romm, and Ran I. Shorrer

American Economic Review, May 2017

Honesty is the best policy in the face of a strategy-proof mechanism--irrespective of others' behavior, the best course of action is to report one's preferences truthfully. We review evidence from different markets in different countries and find that a s...

In Honor of Robert M. Solow: Nobel Laureate in 1987

By Alan S. Blinder

Journal of Economic Perspectives, Summer 1989

Bob Solow shares Galbraith's skill with the pen, Friedman's dexterity with the spoken word, and Samuelson's way of making mathematics sing economics. Take pity on the poor soul—me—who has to stand here and pay tribute to such a man without sou...

Beyond Markets and States: Polycentric Governance of Complex Economic Systems

By Elinor Ostrom

American Economic Review, June 2010

Are Efficiency and Equity in School Finance Substitutes or Complements?

[Symposium: Primary and Secondary Education]

By Caroline Minter Hoxby

Journal of Economic Perspectives, Fall 1996

This paper analyzes cases made for local and centralized school finance and policies such as vouchers, categorical aid, and equalization aid. An ideal system of school finance would achieve efficiency and equity by ensuring every person invests in the amo...

Measuring the Upstreamness of Production and Trade Flows

By Pol Antràs, Davin Chor, Thibault Fally, and Russell Hillberry

American Economic Review, May 2012

We propose two distinct approaches to the measurement of industry upstreamness (or average distance from final use) and show that they yield an equivalent measure. Furthermore, we provide two additional interpretations of this measure, one of them related...

Understanding PPPs and PPP-Based National Accounts

By Angus Deaton and Alan Heston

American Economic Journal: Macroeconomics, October 2010

We provide an overview of the theory and practice of constructing PPPs. We focus on four practical areas: how to handle international differences in quality; the treatment of urban and rural areas of large countries; how to estimate prices for government ...

A's from Zzzz's? The Causal Effect of School Start Time on the Academic Achievement of Adolescents

By Scott E. Carrell, Teny Maghakian, and James E. West

American Economic Journal: Economic Policy, August 2011

Recent sleep research finds that many adolescents are sleep-deprived because of both early school start times and changing sleep patterns during the teen years. This study identifies the causal effect of school start time on academic achievement by using ...

Who Bears Aggregate Fluctuations and How?

By Jonathan A. Parker and Annette Vissing-Jorgensen

American Economic Review, May 2009

The Brain as a Hierarchical Organization

By Isabelle Brocas and Juan D. Carrillo

American Economic Review, September 2008

Based on recent neuroscience evidence, we model the brain as a dual-system organization subject to three conflicts: asymmetric information, temporal horizon, and incentive salience. Under the first and second conflicts, we show that the uninformed syst...

Supply-Side and Demand-Side Cost Sharing in Health Care

By Randall P. Ellis and Thomas G. McGuire

Journal of Economic Perspectives, Fall 1993

In health markets, the price paid by insured consumers when health care services are demanded can be set separately from the price paid to providers when services are supplied. This fact suggests two alternate strategies for controlling the costs of healt...

Multiple-Product Firms and Product Switching

By Andrew B. Bernard, Stephen J. Redding, and Peter K. Schott

American Economic Review, March 2010

This paper examines the frequency, pervasiveness, and determinants of product switching by US manufacturing firms. We find that one-half of firms alter their mix of five-digit SIC products every five years, that product switching is correlated with bot...

New Trade Models, Same Old Gains?

By Costas Arkolakis, Arnaud Costinot, and Andrés Rodríguez-Clare

American Economic Review, February 2012

Micro-level data have had a profound influence on research in international trade over the last ten years. In many regards, this research agenda has been very successful. New stylized facts have been uncovered and new trade models have been developed to e...