In Praise of Confidence Intervals

By David Romer

AEA Papers and Proceedings, May 2020

Most empirical papers in economics focus on two aspects of their results: whether the estimates are statistically significantly different from zero and the interpretation of the point estimates. This focus obscures important information about the implicat...

Research Transparency Is on the Rise in Economics

By Nicholas Swanson ⓡ Garret Christensen ⓡ Rebecca Littman ⓡ David Birke ⓡ Edward Miguel ⓡ Elizabeth Levy Paluck ⓡ Zenan Wang

AEA Papers and Proceedings, May 2020

This study provides a first assessment of awareness of, attitudes toward, perceived norms regarding, and adoption of open science practices within a broadly representative sample of active economics researchers. We observe a steep increase in adoption ove...

A Proposed Specification Check for p-Hacking

By Abel Brodeur, Nikolai Cook, and Anthony Heyes

AEA Papers and Proceedings, May 2020

We propose a specification check for p-hacking. More specifically, we advocate the reporting of t-curves and mu-curves—the t-statistics and estimated effect sizes derived from regressions using every possible combination of control variables from the re...

Do Pre-analysis Plans Hamper Publication?

By George K. Ofosu and Daniel N. Posner

AEA Papers and Proceedings, May 2020

Scholars assert that pre-analysis plans (PAPs) generate boring, lab-report style papers and thus hamper publication. We test this claim by comparing the publication rates of experimental NBER working papers with and without PAPs. We find that articles wit...

Forecasting the Results of Experiments: Piloting an Elicitation Strategy

By Stefano DellaVigna, Nicholas Otis, and Eva Vivalt

AEA Papers and Proceedings, May 2020

Forecasts of experimental results can clarify the interpretation of research results, mitigate publication bias, and improve experimental designs. We collect forecasts of the results of three Registered Reports preliminarily accepted to the Journal of Dev...

The Allocation of Decision Authority to Human and Artificial Intelligence

By Susan C. Athey, Kevin A. Bryan, and Joshua S. Gans

AEA Papers and Proceedings, May 2020

The allocation of decision authority by a principal to either a human agent or an artificial intelligence (AI) is examined. The principal trades off an AI's more aligned choice with the need to motivate the human agent to expend effort in learning choice ...

The Managerial Effects of Algorithmic Fairness Activism

By Bo Cowgill, Fabrizio Dell'Acqua, and Sandra Matz

AEA Papers and Proceedings, May 2020

How do ethical arguments affect AI adoption in business? We randomly expose business decision-makers to arguments used in AI fairness activism. Arguments emphasizing the inescapability of algorithmic bias lead managers to abandon AI for manual review by h...

An Economic Perspective on Algorithmic Fairness

By Ashesh Rambachan, Jon Kleinberg, Jens Ludwig, and Sendhil Mullainathan

AEA Papers and Proceedings, May 2020

There are widespread concerns that the growing use of machine learning algorithms in important decisions may reproduce and reinforce existing discrimination against legally protected groups. Most of the attention to date on issues of "algorithmic bias" or...

Algorithmic Social Engineering

By Bo Cowgill and Megan T. Stevenson

AEA Papers and Proceedings, May 2020

We examine the microeconomics of using algorithms to nudge decision-makers toward particular social outcomes. We refer to this as "algorithmic social engineering." In this article, we apply classic strategic communication models to this strategy. Manipula...

Measuring the Macroeconomic Impact of Carbon Taxes

By Gilbert E. Metcalf and James H. Stock

AEA Papers and Proceedings, May 2020

Policymakers often express concern about the impact of carbon taxes on employment or GDP. Using a new dataset on carbon tax rates, we estimate the macroeconomic impacts of these taxes on GDP and employment growth rates for various specifications and sampl...

The Fiscal Costs of Climate Change

By Lint Barrage

AEA Papers and Proceedings, May 2020

This paper explores the fiscal consequences of climate change. The analysis considers climate change impacts on (i) the cost of existing government services (e.g., disaster assistance) and (ii) the need for publicly provided anticipatory adaptation (e.g.,...

The Cost-Effectiveness Implications of Carbon Price Certainty

By Joseph E. Aldy and Sarah Armitage

AEA Papers and Proceedings, May 2020

While a firm knows the carbon price with certainty under a tax, it must form an expectation about future allowance prices to identify its cost-effective abatement investment under a cap-and-trade program. We illustrate graphically how errors in forming th...

Effects of Fiscal Policy on Credit Markets

By Alan J. Auerbach, Yuriy Gorodnichenko, and Daniel Murphy

AEA Papers and Proceedings, May 2020

Credit markets typically freeze in recessions: access to credit declines, and the cost of credit increases. A conventional policy response is to rely on monetary tools to saturate financial markets with liquidity. Given limited space for monetary policy i...

Automatic Stabilizers in a Low-Rate Environment

By Olivier J. Blanchard and Lawrence H. Summers

AEA Papers and Proceedings, May 2020

In a world where monetary policy cannot assume responsibility for stabilization policy, there is a strong need for fiscal policy to address stabilization issues. In this context, we argue for "semi-automatic stabilizers," aimed at reducing unemployment sl...

National Fiscal Policies to Fight Recessions in US States

By Karen Dynan and Douglas Elmendorf

AEA Papers and Proceedings, May 2020

Countercyclical fiscal policy generally focuses on national economic downturns. But US states experience significantly different patterns of unemployment, and demand shocks appear to drive much of that variation. State budget rules limit the ability of st...

Public Debt, Interest Rates, and Negative Shocks

By Richard W. Evans

AEA Papers and Proceedings, May 2020

Debt-to-GDP ratios across developed economies are at historically high levels, and government borrowing rates remain persistently low. Blanchard (2019) provides evidence that the fiscal costs and welfare costs are low of increased government debt in low i...

A Skeptic's Guide to Modern Monetary Theory

By N. Gregory Mankiw

AEA Papers and Proceedings, May 2020

This essay discusses a new approach to macroeconomics called modern monetary theory (MMT). It identifies the key differences between MMT and the approach found in mainstream textbooks. It concludes that while MMT contains some kernels of truth, its most n...

Are Large Deficits and Debt Dangerous?

By Michael J. Boskin

AEA Papers and Proceedings, May 2020

The traditional view of large deficits and debt is that they are harmful, save in recession/early recovery, for tax smoothing or to fund productive public investment, as they crowd out private investment and lower future income, and taken to extremes, can...

Simulating the Blanchard Conjecture in a Multiperiod Life Cycle Model

By Jasmina Hasanhodzic

AEA Papers and Proceedings, May 2020

In recent writings, Olivier Blanchard has suggested that when the safe rate on government debt is less that the economy's growth rate, additional deficit-financed US federal spending would come at no cost to any future generation and benefits to some. Thi...

Leveraging Posterity's Prosperity?

By Johannes Brumm, Laurence Kotlikoff, and Felix Kubler

AEA Papers and Proceedings, May 2020

We critically review studies by Blanchard (B) and Rachel and Summers (RS). By the standard fiscal-gap measure, the US government is in dire fiscal shape thanks to constantly enlarging its postwar, take-as-you-go Ponzi scheme. Yet B and RS seemingly ration...