Retrospectives: The Marginal Cost Controversy

By Brett M. Frischmann and Christiaan Hogendorn

Journal of Economic Perspectives, Winter 2015

From 1938 to 1950, there was a spirited debate about whether decreasing-average-cost industries should set prices at marginal cost, with attendant subsidies if necessary. In 1938, Harold Hotelling published a forceful and far-reaching proposal for margi...

Implications of Intellectual Property Rights for Dynamic Gains from Trade

By Michelle Connolly and Diego Valderrama

American Economic Review, May 2005

The Origins of Endogenous Growth

[Symposium: New Growth Theory]

By Paul M. Romer

Journal of Economic Perspectives, Winter 1994

This paper describes two strands of work that converged under the heading of 'endogenous growth.' One strand, which is primarily empirical, asks whether there is a general tendency for poor countries to catch up with rich countries. The other strand, whic...

Social Identity and Preferences

By Daniel J. Benjamin, James J. Choi, and A. Joshua Strickland

American Economic Review, September 2010

Social identities prescribe behaviors for people. We identify the marginal behavioral effect of these norms on discount rates and risk aversion by measuring how laboratory subjects' choices change when an aspect of social identity is made salient. When we...

The Labor Market Impact of Mandated Employment Verification Systems

By Catalina Amuedo-Dorantes and Cynthia Bansak

American Economic Review, May 2012

Employment verification systems covered about one out of four people hired in the United States in 2010. In this paper, we evaluate the impact of state-level employment verification mandates on the employment and wages of likely unauthorized workers acros...

Treasury I and the Tax Reform Act of 1986: The Economics and Politics of Tax Reform

[Symposium: Tax Reform]

By Charles E. McLure, Jr. and George R. Zodrow

Journal of Economic Perspectives, Summer 1987

During President Reagan's State of the Union Address in January 1984, he requested that Treasury Secretary Donald Regan prepare "a plan for action to simplify the entire tax code so that all taxpayers, big and small, are treated more fairly." In response,...

A Simple Auction Mechanism for the Optimal Allocation of the Commons

By Juan-Pablo Montero

American Economic Review, March 2008

Efficient regulation of the commons requires information about the regulated firms that is rarely available to regulators (e.g., cost of pollution abatement). This paper proposes a simple mechanism that implements the first-best for any number of firms: a...

Moore's Law versus Murphy's Law: Algorithmic Trading and Its Discontents

[Symposium: The Growth of the Financial Sector]

By Andrei A. Kirilenko and Andrew W. Lo

Journal of Economic Perspectives, Spring 2013

Financial markets have undergone a remarkable transformation over the past two decades due to advances in technology. These advances include faster and cheaper computers, greater connectivity among market participants, and perhaps most important of all, m...

Disclosure by Politicians

By Simeon Djankov, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer

American Economic Journal: Applied Economics, April 2010

We collect data on the rules and practices of financial and conflict disclosure by members of Parliament in 175 countries. Although two-thirds of the countries have some disclosure laws, less than one-third make disclosures available to the public, and...

Can Owning a Home Hedge the Risk of Moving?

By Todd Sinai and Nicholas Souleles

American Economic Journal: Economic Policy, May 2013

For households that face a possibility of moving across MSAs, the risk of home owning depends on the covariance of the sale prices of their current houses with the purchase prices of their likely future houses. We find empirically that households tend ...

Measuring the Effect of Blended Learning: Evidence from a Selective Liberal Arts College

By Aaron Swoboda and Lauren Feiler

American Economic Review, May 2016

We compare introductory microeconomics courses that employ a blended learning approach to more traditional control courses at a selective liberal arts college. The blended learning courses required students to complete online homework and watch video lect...

All in the Extended Family: Effects of Grandparents, Aunts, and Uncles on Educational Attainment

By Linda Datcher Loury

American Economic Review, May 2006

Banks as Secret Keepers

By Tri Vi Dang, Gary Gorton, Bengt Holmström, and Guillermo Ordoñez

American Economic Review, April 2017

Banks produce short-term debt for transactions and storing value. The value of this debt must not vary over time so agents can easily trade it at par like money. To produce money-like safe liquidity, banks keep detailed information about their loans secre...

Politics and Local Economic Growth: Evidence from India

By Sam Asher and Paul Novosad

American Economic Journal: Applied Economics, January 2017

Political favoritism affects the allocation of government resources, but is it consequential for growth? Using a close election regression discontinuity design and data from India, we measure the local economic impact of being represented by a politician ...

Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from "Work First"

By David H. Autor and Susan N. Houseman

American Economic Journal: Applied Economics, July 2010

Temporary-help jobs offer rapid entry into paid employment, but they are typically brief and it is unknown whether they foster longer term employment. We utilize the unique structure of Detroit's welfare-to- work program to identify the effect of tempor...

Hedge Funds and the Collapse of Long-Term Capital Management

By Franklin R. Edward

Journal of Economic Perspectives, Spring 1999

The Fed-engineered rescue of Long-Term Capital Management (LTCM) in September 1998 set off alarms throughout financial markets about the activities of hedge funds and the stability of financial markets in general. With only $4.8 billion in equity, LTCM ma...

A Skeptical View of the National Science Foundation's Role in Economic Research

[Symposium: NSF Funding for Economists]

By Tyler Cowen and Alex Tabarrok

Journal of Economic Perspectives, Summer 2016

We can imagine a plausible case for government support of science based on traditional economic reasons of externalities and public goods. Yet when it comes to government support of grants from the National Science Foundation (NSF) for economic research, ...

Dollarization

By Alberto Alesina and Robert J. Barro

American Economic Review, May 2001

Why Being Wrong Can Be Right: Magical Warfare Technologies and the Persistence of False Beliefs

By Nathan Nunn and Raul Sanchez de la Sierra

American Economic Review, May 2017

Across human societies, one sees many examples of deeply rooted and widely held beliefs that are almost certainly untrue. Examples include beliefs about witchcraft, magic, ordeals, and superstitions. Why are such incorrect beliefs so prevalent and how do ...

The Political Economy of the Greek Debt Crisis: A Tale of Two Bailouts

By Silvia Ardagna and Francesco Caselli

American Economic Journal: Macroeconomics, October 2014

We review the events that led to the May 2010 and July 2011 bailout agreements. We interpret the bailouts as outcomes of political-economy equilibria. We argue that these equilibria were likely not on the Pareto frontier, and sketch political-economy a...