Grounded by Gravity: A Well-Behaved Trade Model with Industry-Level Economies of Scale

By Konstantin Kucheryavyy, Gary Lyn, and Andrés Rodríguez-Clare

American Economic Journal: Macroeconomics, April 2023

We propose a model to study the role of industry-level external economies of scale in open economies. If the elasticity governing the strength of external economies is below the inverse of the trade elasticity in each industry, then specialization under f...

The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity

By Nicole Maestas, Kathleen J. Mullen, and David Powell

American Economic Journal: Macroeconomics, April 2023

Population aging is expected to slow US economic growth. We use variation in the predetermined component of population aging across states to estimate the impact of aging on growth in GDP per capita for 1980–2010. We find that each 10 percent increase i...

Persistent Monetary Non-neutrality in an Estimated Menu Cost Model with Partially Costly Information

By Marco Bonomo, Carlos Carvalho, René Garcia, Vivian Malta, and Rodolfo Rigato

American Economic Journal: Macroeconomics, April 2023

We propose a model that reconciles microeconomic evidence of frequent and large price changes with sizable monetary non-neutrality. Firms incur separate lump-sum costs to change prices and to gather and process some information about marginal costs. Addit...

Self-Harming Trade Policy? Protectionism and Production Networks

By Alessandro Barattieri and Matteo Cacciatore

American Economic Journal: Macroeconomics, April 2023

Using monthly data on temporary trade barriers (TTBs), we estimate the dynamic employment effects of protectionism through vertical production linkages. First, exploiting high-frequency data and TTB procedural details, we identify trade policy shocks exog...

Learning-through-Survey in Inflation Expectations

By Gwangmin Kim and Carola Binder

American Economic Journal: Macroeconomics, April 2023

When surveys rely on repeat participants, this raises the possibility that survey participation may affect future responses, perhaps by prompting information acquisition between survey waves. We show that these "learning-through-survey" effects are large ...

The State-Dependent Effectiveness of Hiring Subsidies

By Sebastian Graves

American Economic Journal: Macroeconomics, April 2023

The responsiveness of job creation to shocks is procyclical, while the responsiveness of job destruction is countercyclical. This new finding can be explained by a heterogeneous-firm model in which hiring costs lead to lumpy employment adjustment. The mod...

Capital-Reallocation Frictions and Trade Shocks

By Andrea Lanteri, Pamela Medina, and Eugene Tan

American Economic Journal: Macroeconomics, April 2023

What are the short-term effects of an import-competition shock on capital reallocation and aggregate productivity? To address this question, we develop a quantitative model with heterogeneous firms and capital-reallocation frictions. We discipline the mod...

The Response of Consumer Spending to Changes in Gasoline Prices

By Michael Gelman, Yuriy Gorodnichenko, Shachar Kariv, Dmitri Koustas, Matthew D. Shapiro, Dan Silverman, and Steven Tadelis

American Economic Journal: Macroeconomics, April 2023

This paper estimates how overall consumer spending responds to changes in gasoline prices. It uses the differential impact across consumers of the sharp drop in gasoline prices in 2014 for identification. This estimation strategy is implemented using comp...

Measuring Monetary Policy in the Euro Area Using SVARs with Residual Restrictions

By Harald Badinger and Stefan Schiman

American Economic Journal: Macroeconomics, April 2023

This study measures the effects of monetary policy in the euro area using a small number of sign and magnitude restrictions on the residuals of a structural vector autoregression. We derive the dates and directions of these shocks from high-frequency fina...

State-Dependent Attention and Pricing Decisions

By Javier Turen

American Economic Journal: Macroeconomics, April 2023

This paper studies price-setting decisions under rational inattention. Prices are set by tracking an unobserved target whose distribution is also unknown. Information acquisition is dynamic and fully flexible since, given information acquired previously, ...

Earnings-Based Borrowing Constraints and Macroeconomic Fluctuations

By Thomas Drechsel

American Economic Journal: Macroeconomics, April 2023

Microeconomic evidence reveals a direct link between firms' current earnings and their access to debt. This paper studies macroeconomic implications of earnings-based borrowing constraints. In a macro model, firms with earnings-based constraints borrow mo...

Cross-Sectional Uncertainty and the Business Cycle: Evidence from 40 Years of Options Data

By Ian Dew-Becker and Stefano Giglio

American Economic Journal: Macroeconomics, April 2023

This paper presents a novel and unique measure of cross-sectional uncertainty constructed from stock options on individual firms. Cross-sectional uncertainty varied little between 1980 and 1995 and subsequently had three distinct peaks—during the tech b...

Collective Moral Hazard and the Interbank Market

By Levent Altinoglu and Joseph E. Stiglitz

American Economic Journal: Macroeconomics, April 2023

The concentration of risk within the financial system leads to systemic instability. We propose a theory to explain the structure of the financial system and show how it alters the risk-taking incentives of financial institutions when the government optim...

Rural-Urban Migration, Structural Transformation, and Housing Markets in China

By Carlos Garriga, Aaron Hedlund, Yang Tang, and Ping Wang

American Economic Journal: Macroeconomics, April 2023

This paper investigates the interrelationship between urbanization, structural transformation, and the post-2000 Chinese housing boom through the lens of a dynamic spatial equilibrium model that features migration and a rich housing market structure with ...

Land Misallocation and Productivity

By Chaoran Chen, Diego Restuccia, and Raül Santaeulàlia-Llopis

American Economic Journal: Macroeconomics, April 2023

Using detailed household-level data from Malawi on physical quantities of agricultural outputs and inputs, we measure farm total factor productivity (TFP), controlling for land quality, rain, and transitory shocks. We find that operated land size and capi...

Online Debate: The Firm in the Age of Inexorable Rivalry

[News]

March 31, 2023

This event to be held on May 23, 2023 is hosted by the Academy of International Business.

Persuasion through Slanted Language: Evidence from the Media Coverage of Immigration

By Milena Djourelova

American Economic Review, March 2023

I study the persuasive effects of slanted language, exploiting a ban on the politically charged term "illegal immigrant" by the Associated Press (AP) news wire. My empirical strategy combines the timing of the ban with variation across media outlets in th...

The power of word choice

[Research Highlight]

March 29, 2023

Does slanted language affect public opinion?

Call for Applications for Successfully Navigating Your Economics PhD: A Virtual Mentoring Workshop for 3rd+ Year Women & Non-Binary PhD Students in Health Economics and Health Policy

[News]

April 06, 2023

The application deadline is June 1, 2023.

Labour Economics (2013) Part 1

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