Should We Reject the Natural Rate Hypothesis?

[Symposium: Friedman's Natural Rate Hypothesis after 50 Years]

By Olivier Blanchard

Journal of Economic Perspectives, Winter 2018

Fifty years ago, Milton Friedman articulated the natural rate hypothesis. It was composed of two sub-hypotheses: First, the natural rate of unemployment is independent of monetary policy. Second, there is no long-run trade-off between the deviation of u...

Dynamic Debt Deleveraging and Optimal Monetary Policy

By Pierpaolo Benigno, Gauti B. Eggertsson, and Federica Romei

American Economic Journal: Macroeconomics, April 2020

This paper proposes a postcrisis New Keynesian model that incorporates agent heterogeneity in borrowing and lending with a minimum set of assumptions. Unlike the standard framework, this model makes the natural rate of interest endogenous and dependent on...

Cyclical Job Ladders by Firm Size and Firm Wage

By John C. Haltiwanger, Henry R. Hyatt, Lisa B. Kahn, and Erika McEntarfer

American Economic Journal: Macroeconomics, April 2018

We study whether workers progress up firm wage and size job ladders, and the cyclicality of this movement. Search theory predicts that workers should flow toward larger, higher paying firms. However, we see little evidence of a firm size ladder, partly be...

Should First-Price Auctions Be Transparent?

By Dirk Bergemann and Johannes Hörner

American Economic Journal: Microeconomics, August 2018

We investigate the role of market transparency in repeated first-price auctions. We consider a setting with independent private and persistent values. We analyze three distinct disclosure regimes regarding the bid and award history. In the minimal disclos...

Political Kludges

By Keiichi Kawai, Ruitian Lang, and Hongyi Li

American Economic Journal: Microeconomics, November 2018

This paper explores the origins of policy complexity. It studies a model where policy is difficult to undo because policy elements are entangled with each other. Policy complexity may accumulate as successive policymakers layer new rules upon existing pol...

Optimal Forward Guidance

By Florin O. Bilbiie

American Economic Journal: Macroeconomics, October 2019

Optimal forward guidance is the simple policy of keeping interest rates low for some optimally determined number of periods after the liquidity trap ends and moving to normal-times optimal policy thereafter. I solve for the optimal duration in closed form...

Annotated Listing of New Books

Journal of Economic Literature, December 2018

When Demand Increases Cause Shakeouts

By Thomas N. Hubbard and Michael J. Mazzeo

American Economic Journal: Microeconomics, November 2019

Standard models that guide competition policy imply that demand increases should lead to more, not fewer firms. However, Sutton's (1991) model shows that demand increases instead can lead to shakeouts if non-price competition takes the form of fixed inves...

How Are SNAP Benefits Spent? Evidence from a Retail Panel

By Justine Hastings and Jesse M. Shapiro

American Economic Review, December 2018

We use a novel retail panel with detailed transaction records to study the effect of the Supplemental Nutrition Assistance Program (SNAP) on house-hold spending. We use administrative data to motivate three approaches to causal inference. The marginal pro...

Offshoring and Labor Markets

By David Hummels, Jakob R. Munch, and Chong Xiang

Journal of Economic Literature, September 2018

In this paper we survey the recent empirical literature on the effects of offshoring on wage, employment and displacement. We start with an overview of the measurement of offshoring, organizing our discussion around the three key elements of offshoring: t...

Generational Differences in Managing Personal Finances

By Bruce Carlin, Arna Olafsson, and Michaela Pagel

AEA Papers and Proceedings, May 2019

In this article, we provide a descriptive account of how people from different generations vary in their use of financial management technology, their access credit markets, and how they finance consumption and incur financial costs and penalties. We use ...

When Labor's Lost: Health, Family Life, Incarceration, and Education in a Time of Declining Economic Opportunity for Low-Skilled Men

[Symposium: The Problems of Men]

By Courtney C. Coile and Mark G. Duggan

Journal of Economic Perspectives, Spring 2019

The economic progress of US men has stagnated in recent decades. The labor force participation rate of men ages 25-54 peaked in the mid-1960s and has declined since then (according to the Bureau of Labor Statistics), while men's real median earnings hav...

International Trade with Indirect Additivity

By Paolo Bertoletti, Federico Etro, and Ina Simonovska

American Economic Journal: Microeconomics, May 2018

We develop a general equilibrium model of trade that features "indirectly additive" preferences and heterogeneous firms. Monopolistic competition generates markups that are increasing in firm productivity and in destination country per capita income, but ...

Gendered medicine

[Page]

How does homophily help explain the gender gap among physicians?

INOMICS Salary Survey for Economists

[News]

April 23, 2020

The survey will help INOMICS research the effect of the Covid-19 pandemic on the salaries and career prospects of economists.

After the flood

[Research Highlight]

April 22, 2020

Does economic activity move away from flood-prone areas after catastrophe strikes?

Flooded Cities

By Adriana Kocornik-Mina, Thomas K. J. McDermott, Guy Michaels, and Ferdinand Rauch

American Economic Journal: Applied Economics, April 2020

Does economic activity move away from areas that are at high risk of recurring shocks? We examine this question in the context of floods, which displaced more than 650 million people worldwide in the last 35 years. We study large urban floods using spatia...

Front Matter

American Economic Journal: Microeconomics, May 2020

Biased-Belief Equilibrium

By Yuval Heller and Eyal Winter

American Economic Journal: Microeconomics, May 2020

We investigate how distorted, yet structured, beliefs can persist in strategic situations. Specifically, we study two-player games in which each player is endowed with a biased-belief function that represents the discrepancy between a player's beliefs abo...

Digitizing Disclosure: The Case of Restaurant Hygiene Scores

By Weijia Dai and Michael Luca

American Economic Journal: Microeconomics, May 2020

Collaborating with Yelp and the City of San Francisco, we revisit a canonical example of quality disclosure by evaluating and helping to redesign the posting of restaurant hygiene scores on Yelp.com. We implement a two-stage intervention that separately i...