Ben Bernanke, Distinguished Fellow 2020

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The anatomy of inequality

[Research Highlight]

November 24, 2020

Florian Hoffman discusses how income disparities have grown in the US and Europe over the last 40 years.

Designing Dynamic Research Contests

By Jean-Michel Benkert and Igor Letina

American Economic Journal: Microeconomics, November 2020

This paper studies the optimal design of dynamic research contests. We introduce interim transfers, which are paid in every period while the contest is ongoing, to an otherwise standard setting. We show that a contest where (i) the principal can stop the ...

Incentivizing innovation

[Research Highlight]

November 20, 2020

Could the "interim-payment" model solve flaws with research contests?

Front Matter

American Economic Review, December 2020

Missing Events in Event Studies: Identifying the Effects of Partially Measured News Surprises

By Refet S. Gürkaynak, Burçin Kisacikoğlu, and Jonathan H. Wright

American Economic Review, December 2020

Macroeconomic news announcements are elaborate and multi-dimensional. We consider a framework in which jumps in asset prices around announcements reflect both the response to observed surprises in headline numbers and to latent factors, reflecting other n...

Discounts and Deadlines in Consumer Search

By Dominic Coey, Bradley J. Larsen, and Brennan C. Platt

American Economic Review, December 2020

We present a new equilibrium search model where consumers initially search among discount opportunities, but are willing to pay more as a deadline approaches, eventually turning to full-price sellers. The model predicts equilibrium price dispersion and ra...

Changing Business Dynamism and Productivity: Shocks versus Responsiveness

By Ryan A. Decker, John Haltiwanger, Ron S. Jarmin, and Javier Miranda

American Economic Review, December 2020

The pace of job reallocation has declined in the United States in recent decades. We draw insight from canonical models of business dynamics in which reallocation can decline due to (i) lower dispersion of idiosyncratic shocks faced by businesses, or (ii)...

A Model of Competing Narratives

By Kfir Eliaz and Ran Spiegler

American Economic Review, December 2020

We formalize the argument that political disagreements can be traced to a "clash of narratives." Drawing on the "Bayesian Networks" literature, we represent a narrative by a causal model that maps actions into consequences, weaving a selection of other ra...

Screening and Selection: The Case of Mammograms

By Liran Einav, Amy Finkelstein, Tamar Oostrom, Abigail Ostriker, and Heidi Williams

American Economic Review, December 2020

We analyze selection into screening in the context of recommendations that breast cancer screening start at age 40. Combining medical claims with a clinical oncology model, we document that compliers with the recommendation are less likely to have cancer ...

What Makes a Rule Complex?

By Ryan Oprea

American Economic Review, December 2020

We study the complexity of rules by paying experimental subjects to implement a series of algorithms and then eliciting their willingness-to-pay to avoid implementing them again in the future. The design allows us to examine hypotheses from the theoretica...

A Few Bad Apples Spoil the Barrel: An Anti-folk Theorem for Anonymous Repeated Games with Incomplete Information

By Takuo Sugaya and Alexander Wolitzky

American Economic Review, December 2020

We study anonymous repeated games where players may be "commitment types" who always take the same action. We establish a stark anti-folk theorem: if the distribution of the number of commitment types satisfies a smoothness condition and the game has a "p...

Front Matter

American Economic Review: Insights, December 2020

What Do Survey Data Tell Us about US Businesses?

By Anmol Bhandari, Serdar Birinci, Ellen R. McGrattan, and Kurt See

American Economic Review: Insights, December 2020

This paper examines the reliability of survey data on business incomes, valuations, and rates of return, which are key inputs for studies of wealth inequality and entrepreneurial choice. We compare survey responses of business owners with available data f...

Efficiency, Justified Envy, and Incentives in Priority-Based Matching

By Atila Abdulkadiroğlu, Yeon-Koo Che, Parag A. Pathak, Alvin E. Roth, and Olivier Tercieux

American Economic Review: Insights, December 2020

Top trading cycles (TTC ) is Pareto efficient and strategy-proof in priority-based matching, but so are other mechanisms including serial dictatorship. We show that TTC minimizes justified envy among all Pareto-efficient and strategy-proof mechanisms in o...

Invisible Geniuses: Could the Knowledge Frontier Advance Faster?

By Ruchir Agarwal and Patrick Gaule

American Economic Review: Insights, December 2020

A better understanding of the determinants of idea/knowledge production remains critical for long-run growth. Toward this end, this paper establishes two results using data from the International Mathematical Olympiad (IMO). First, individuals who excelle...

The Welfare Magnet Hypothesis: Evidence from an Immigrant Welfare Scheme in Denmark

By Ole Agersnap, Amalie Jensen, and Henrik Kleven

American Economic Review: Insights, December 2020

We study the effects of welfare generosity on international migration using reforms of immigrant welfare benefits in Denmark. The first reform, implemented in 2002, lowered benefits for non-EU immigrants by about 50 percent, with no changes for natives or...

After the Panic: Are Financial Crises Demand or Supply Shocks? Evidence from International Trade

By Felipe Benguria and Alan M. Taylor

American Economic Review: Insights, December 2020

Are financial crises a negative shock to aggregate demand or supply? This is a fundamental question for research and policy making. Arguments for stimulus usually presume demand-side shortfalls; arguments for tax cuts or structural reform look to the supp...

Strategy-Proofness, Independence of Irrelevant Alternatives, and Majority Rule

By Partha Dasgupta and Eric Maskin

American Economic Review: Insights, December 2020

We show that strategy-proofness, the Pareto principle, anonymity, neutrality, independence of irrelevant alternatives, and decisiveness uniquely characterize majority rule on any domain of preferences for which there exists a voting rule satisfying these ...

Moving to a healthier place

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Hurricane Katrina forced New Orleanians to uproot and live somewhere else. What effect did that have on their health?