Front Matter

American Economic Journal: Economic Policy, May 2023

Externalities in International Tax Enforcement: Theory and Evidence

By Thomas Tørsløv, Ludvig Wier, and Gabriel Zucman

American Economic Journal: Economic Policy, May 2023

We show that the fiscal authorities of high-tax countries can lack the incentives to combat profit shifting to tax havens. Instead, they have incentives to focus their enforcement efforts on relocating profits booked by multinationals in other high-tax co...

Peer Effects in Police Use of Force

By Justin E. Holz, Roman G. Rivera, and Bocar A. Ba

American Economic Journal: Economic Policy, May 2023

We study the link between police officers' on-duty injuries and their peers' force use using a network of officers who attended the police academy together through a random lottery. On-duty injuries increase the probability of officers using force by 7 pe...

Can Forward Commodity Markets Improve Spot Market Performance? Evidence from Wholesale Electricity

By Akshaya Jha and Frank A. Wolak

American Economic Journal: Economic Policy, May 2023

Forward markets are believed to aggregate information about future spot prices and reduce the cost of producing the commodity. We develop a measure of the extent to which forward and spot prices agree in markets with transaction costs. Using this measure,...

How Do Institutions of Higher Education Affect Local Invention? Evidence from the Establishment of US Colleges

By Michael J. Andrews

American Economic Journal: Economic Policy, May 2023

I use narrative historical data on site selection decisions for a subset of US colleges to identify runner-up locations that were strongly considered to become the sites of new colleges. Using runner-up counties as counterfactuals in a difference-in-diffe...

Pensions and Fertility: Microeconomic Evidence

By Alexander M. Danzer and Lennard Zyska

American Economic Journal: Economic Policy, May 2023

This study identifies the causal effect of pension generosity on women's fertility behavior. It capitalizes on Brazil's expansion of the pension system to rural workers, whose pension wealth subsequently more than tripled. Difference-in-difference, instru...

No Spending without Representation: School Boards and the Racial Gap in Education Finance

By Brett Fischer

American Economic Journal: Economic Policy, May 2023

This paper provides causal evidence that greater minority representation on school boards translates into greater investment in minority students. Focusing on California school boards, I instrument for minority (specifically, Hispanic) representation usin...

Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy

By Enrico Moretti and Daniel J. Wilson

American Economic Journal: Economic Policy, May 2023

We contribute to the literature on the effect of taxes on the locational choices of wealthy individuals by examining the geographical sensitivity of the Forbes 400 richest Americans to state estate taxes. Though we find billionaires' effective tax rates a...

Profiting from Most-Favored-Customer Procurement Rules: Evidence from Medicaid

By Josh Feng, Thomas Hwang, and Luca Maini

American Economic Journal: Economic Policy, May 2023

Using a difference-in-difference approach, we find that an increase to Medicaid's minimum drug rebate under the Affordable Care Act in 2010 lowered non-Medicaid drug spending by 2.5 percent. A stylized bargaining model shows that this is likely driven by ...

Go with the Politician

By Yongwei Nian and Chunyang Wang

American Economic Journal: Economic Policy, May 2023

Chinese local leaders are frequently moved across prefectures. By combining local leader rotation data and comprehensive firm land parcel purchase data across prefectures from 2006 to 2016, this paper examines how firm-politician connections affect resour...

Coase and Cap-and-Trade: Evidence on the Independence Property from the European Carbon Market

By Aleksandar Zaklan

American Economic Journal: Economic Policy, May 2023

I examine the Coasean independence property in a large multinational cap-and-trade scheme for greenhouse gas emissions, the EU Emissions Trading System. I analyze whether emissions of power producers are independent from allowance allocations by leveragin...

The Health Impacts of Hospital Delivery Practices

By David Card, Alessandra Fenizia, and David Silver

American Economic Journal: Economic Policy, May 2023

Treatment practices vary widely across hospitals, often with little connection to patients' medical needs. We assess impacts of these differences in delivery practices at childbirth. We find that infants quasi-randomly delivered at hospitals with higher C...

Ask and You Shall Receive? Gender Differences in Regrades in College

By Cher Hsuehhsiang Li and Basit Zafar

American Economic Journal: Economic Policy, May 2023

Using administrative data from a large public university, we show that male students are 18.6 percent more likely than female students to receive favorable grade changes made by instructors. Surveys of students and instructors reveal that regrade requests...

Optimal Income Taxation with Spillovers from Employer Learning

By Ashley C. Craig

American Economic Journal: Economic Policy, May 2023

I study optimal income taxation when human capital investment is imperfectly observable by employers. In the model, Bayesian inference about worker productivity compresses the wage distribution, lowering the private return to human capital investment. An ...

Climate Change and Labor Reallocation: Evidence from Six Decades of the Indian Census

By Maggie Liu, Yogita Shamdasani, and Vis Taraz

American Economic Journal: Economic Policy, May 2023

How do rising temperatures affect long-term labor reallocation in developing economies? In this paper we examine how increases in temperature impact structural transformation and urbanization within Indian districts between 1951 and 2011. We find that ris...

Borrowing Costs after Sovereign Debt Relief

By Valentin Lang, David Mihalyi, and Andrea F. Presbitero

American Economic Journal: Economic Policy, May 2023

Can debt moratoria help countries weather negative shocks? We exploit the Debt Service Suspension Initiative (DSSI) to study the bond market effects of deferring official debt repayments. Using daily data on sovereign bond spreads and synthetic control me...

Does Pay Transparency Affect the Gender Wage Gap? Evidence from Austria

By Andreas Gulyas, Sebastian Seitz, and Sourav Sinha

American Economic Journal: Economic Policy, May 2023

We study the 2011 Austrian pay transparency law, which requires firms above a size threshold to publish internal reports on the gender pay gap. Using an event-study design, we show that the policy had no discernible effects on male and female wages, thus ...

The impact of bubbly episodes

[Research Highlight]

April 27, 2023

How do economic bubbles and crashes affect long-run economic growth?

Bubbles, Crashes, and Economic Growth: Theory and Evidence

By Pablo A. Guerron-Quintana, Tomohiro Hirano, and Ryo Jinnai

American Economic Journal: Macroeconomics, April 2023

We analyze the ups and downs in economic growth in recent decades by constructing a model with recurrent bubbles, crashes, and endogenous growth. Once realized, bubbles crowd in investment and stimulate economic growth, but expectation about future bubble...