The Safe Assets Shortage Conundrum

[Symposium: The Global Monetary System]

By Ricardo J. Caballero, Emmanuel Farhi, and Pierre-Olivier Gourinchas

Journal of Economic Perspectives, Summer 2017

A safe asset is a simple debt instrument that is expected to preserve its value during adverse systemic events. The supply of safe assets, private and public, has historically been concentrated in a small number of advanced economies, most prominently t...

Reforming LIBOR and Other Financial Market Benchmarks

By Darrell Duffie and Jeremy C. Stein

Journal of Economic Perspectives, Spring 2015

LIBOR is the London Interbank Offered Rate: a measure of the interest rate at which large banks can borrow from one another on an unsecured basis. LIBOR is often used as a benchmark rate—meaning that the interest rates that consumers and businesses ...

"Fisher Dynamics" in US Household Debt, 1929-2011

By J. W. Mason and Arjun Jayadev

American Economic Journal: Macroeconomics, July 2014

The evolution of debt-income ratios over time depends on income growth, inflation, and interest rates, independent of any changes in borrowing. We examine the effect of these "Fisher dynamics" on household debt-income ratios in the United States over the ...

Agricultural Volatility and Investments in Children

By Robert Jensen

American Economic Review, May 2000

A Century of US Central Banking: Goals, Frameworks, Accountability

[Symposium: The First 100 Years of the Federal Reserve]

By Ben S. Bernanke

Journal of Economic Perspectives, Fall 2013

Several key episodes in the 100-year history of the Federal Reserve have been referred to in various contexts with the adjective "Great" attached to them: the Great Experiment of the Federal Reserve's founding, the Great Depression, the Great Inflation ...

Police Officer on the Frontline or a Soldier? The Effect of Police Militarization on Crime

By Vincenzo Bove and Evelina Gavrilova

American Economic Journal: Economic Policy, August 2017

Sparked by high-profile confrontations between police and citizens in Ferguson, Missouri, and elsewhere, many commentators have criticized the excessive militarization of law enforcement. We investigate whether surplus military-grade equipment acquired by...

Resolving Debt Overhang: Political Constraints in the Aftermath of Financial Crises

By Atif Mian, Amir Sufi, and Francesco Trebbi

American Economic Journal: Macroeconomics, April 2014

Countries become more politically polarized and fractionalized following financial crises, reducing the likelihood of major financial reforms precisely when they might have especially large benefits. The evidence from a large sample of countries provides...

What High-Achieving Low-Income Students Know about College

By Caroline M. Hoxby and Sarah Turner

American Economic Review, May 2015

Previous work demonstrates that low-income higher achievers fail to apply to selective colleges despite their being admitted at high rates and receiving financial aid so generous that they pay less than at non-selective schools. The Expanding College Oppo...

Migrant Remittances

[Symposium: Emigration]

By Dean Yang

Journal of Economic Perspectives, Summer 2011

This article is about the economics of migrant remittances sent to developing countries. I review the overall magnitude of remittances and what current research reveals about the motivations for migrant remittances and what effects they have. I discuss fi...

The Need for Accountability in Education in Developing Countries

[Symposium: Schools and Accountability]

By Isaac M. Mbiti

Journal of Economic Perspectives, Summer 2016

Despite the rapid growth in enrollment rates across the developing world, there are major concerns about the quality of education that children receive. Across numerous developing countries, recent learning assessments have revealed that children are not ...

Weak States and Steady States: The Dynamics of Fiscal Capacity

By Timothy Besley, Ethan Ilzetzki, and Torsten Persson

American Economic Journal: Macroeconomics, October 2013

Investments in fiscal capacity—economic institutions for tax compliance—are an important feature of economic development. This paper develops a dynamic model to study the evolution of fiscal capacity over time. We contrast a social planner's investm...

An Accountant among Economists: Conservations with Sir John R. Hicks

By Arjo Klamer

Journal of Economic Perspectives, Fall 1989

Sir John Hicks (1904-1989) has left an indelible impression on modern economic discourse. His Value and Capital (1939) stood as a model for neoclassical microeconomics as economists know it today. His condensation of Keynes's General Theory in the form o...

Putting Risk in Its Proper Place

By Louis Eeckhoudt and Harris Schlesinger

American Economic Review, March 2006

This paper examines preferences toward particular classes of lottery pairs. We show how such concepts as prudence and temperance can be fully characterized by a preference relation over these lotteries. If preferences are defined in an expected-utility fr...

Referrals

By Luis Garicano and Tano Santos

American Economic Review, June 2004

This paper studies the matching of opportunities with talent when costly diagnosis confers an informational advantage to the agent undertaking it. When this agent is underqualified, adverse selection prevents efficient referrals through fixed-price contra...

Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: A Regression Discontinuity Design with Heterogeneous Treatment Effects

By Sascha O. Becker, Peter H. Egger, and Maximilian von Ehrlich

American Economic Journal: Economic Policy, November 2013

Researchers often estimate average treatment effects of programs without investigating heterogeneity across units. Yet, individuals, firms, regions, or countries vary in their ability to utilize transfers. We analyze Objective 1 transfers of the EU to ...

Reference Points and Effort Provision

By Johannes Abeler, Armin Falk, Lorenz Goette, and David Huffman

American Economic Review, April 2011

A key open question for theories of reference-dependent preferences is: what determines the reference point? One candidate is expectations: what people expect could affect how they feel about what actually occurs. In a real-effort experiment, we manipulat...

School Quality and the Gender Gap in Educational Achievement

By David Autor, David Figlio, Krzysztof Karbownik, Jeffrey Roth, and Melanie Wasserman

American Economic Review, May 2016

Recent evidence indicates that boys and girls are differently affected by the quantity and quality of family inputs received in childhood. We assess whether this is also true for schooling inputs. Using matched Florida birth and school administrative reco...

Comparing Real Wage Rates: Presidential Address

By Orley Ashenfelter

American Economic Review, April 2012

A real wage rate is a nominal wage rate divided by the price of a good and is a transparent measure of how much of the good an hour of work buys. It provides an important indicator of the living standards of workers, and also of the productivity of worker...

Pricing-to-Market, Trade Costs, and International Relative Prices

By Andrew Atkeson and Ariel Burstein

American Economic Review, December 2008

International relative prices across industrialized countries show large and systematic deviations from relative purchasing power parity. We embed a model of imperfect competition and variable markups in a quantitative model of international trade. We ...

Let Them Have Choice: Gains from Shifting Away from Employer-Sponsored Health Insurance and toward an Individual Exchange

By Leemore Dafny, Kate Ho, and Mauricio Varela

American Economic Journal: Economic Policy, February 2013

Most nonelderly Americans purchase health insurance through their employers, which sponsor a limited number of plans. Using a panel dataset representing over ten million insured lives, we estimate employees' preferences for different health plans and us...