Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome

[Symposium: Macroeconomics after the Financial Crisis]

By Ricardo J. Caballero

Journal of Economic Perspectives, Fall 2010

The recent financial crisis has damaged the reputation of macroeconomics, largely for its inability to predict the impending financial and economic crisis. To be honest, this inability to predict does not concern me much. It is almost tautological that se...

Taxing Capital? Not a Bad Idea after All!

By Juan Carlos Conesa, Sagiri Kitao, and Dirk Krueger

American Economic Review, March 2009

We quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks and permanent productivity differences of households. The optimal capital income tax rate is signi...

The Geography of Trade and Technology Shocks in the United States

By David H. Autor, David Dorn, and Gordon H. Hanson

American Economic Review, May 2013

This paper explores the geographic overlap of trade and technology shocks across local labor markets in the United States. Regional exposure to technological change, as measured by specialization in routine task-intensive production and clerical occupatio...

News, Noise, and Fluctuations: An Empirical Exploration

By Olivier J. Blanchard, Jean-Paul L'Huillier, and Guido Lorenzoni

American Economic Review, December 2013

We explore empirically models of aggregate fluctuations in which consumers form anticipations about the future based on noisy sources of information and these anticipations affect output in the short run. Our objective is to separate fluctuations due to...

Bankruptcy: Is It Enough to Forgive or Must We Also Forget?

By Ronel Elul and Piero Gottardi

American Economic Journal: Microeconomics, November 2015

In many countries, lenders are restricted in their access to information about borrowers' past defaults. We study this provision in a model of repeated borrowing and lending with moral hazard and adverse selection. We analyze its effects on borrowers' inc...

The Impacts of Microcredit: Evidence from Bosnia and Herzegovina

By Britta Augsburg, Ralph De Haas, Heike Harmgart, and Costas Meghir

American Economic Journal: Applied Economics, January 2015

We use an RCT to analyze the impacts of microcredit. The study population consists of loan applicants who were marginally rejected by an MFI in Bosnia. A random subset of these were offered a loan. We provide evidence of higher self-employment, increases ...

Margins of Multinational Labor Substitution

By Marc-Andreas Muendler and Sascha O. Becker

American Economic Review, December 2010

Employment at a multinational enterprise (MNE) responds to wages at the extensive margin, when an MNE enters a foreign location, and at the intensive margin, when an MNE operates existing affiliates. We present an MNE model and conditions for parametric a...

Consumption Taxes and Redistribution

By Isabel Correia

American Economic Review, September 2010

This study considers replacing the current US tax system with only a flat tax consumption tax, showing, in contrast to the literature, that such a reform leads to a decline in inequality and increase in welfare for the welfare-poor. The results are obtain...

Default Risk and Income Fluctuations in Emerging Economies

By Cristina Arellano

American Economic Review, June 2008

Recent sovereign defaults are accompanied by interest rate spikes and deep recessions. This paper develops a small open economy model to study default risk and its interaction with output and foreign debt. Default probabilities and interest rates depen...

Dividends and Expropriation

By Mara Faccio, Larry H. P. Lang, and Leslie Young

American Economic Review, March 2001

Whereas most U.S. corporations are widely held, the predominant form of ownership in East Asia is control by a family, which often supplies a top manager. These features of "crony capitalism" are actually more pronounced in Western Europe. In both regions...

Bureaucrats or Politicians? Comment

By Fuhito Kojima

American Economic Review, March 2008

Alesina and Tabellini (2007) investigate the normative criteria for allocating policy tasks to bureaucrats versus politicians. While they establish criteria with respect to a number of parameters, they do not give a criterion with respect to the degree of...

Adam Smith, Behavioral Economist

[Symposium: The Moral Sentiments]

By Nava Ashraf, Colin F. Camerer, and George Loewenstein

Journal of Economic Perspectives, Summer 2005

Adam Smith's psychological perspective in The Theory of Moral Sentiments is remarkably similar to "dual-process" frameworks advanced by psychologists, neuroscientists, and more recently by behavioral economists, based on behavioral data and detailed obser...

The Enduring Impact of the American Dust Bowl: Short- and Long-Run Adjustments to Environmental Catastrophe

By Richard Hornbeck

American Economic Review, June 2012

The 1930s American Dust Bowl was an environmental catastrophe that greatly eroded sections of the Plains. The Dust Bowl is estimated to have immediately, substantially, and persistently reduced agricultural land values and revenues in more-eroded counties...

The Agricultural Origins of Time Preference

By Oded Galor and Ömer Özak

American Economic Review, October 2016

This research explores the origins of observed differences in time preference across countries and regions. Exploiting a natural experiment associated with the expansion of suitable crops for cultivation in the course of the Columbian Exchange, the resear...

Pricing Payment Cards

By Özlem Bedre-Defolie and Emilio Calvano

American Economic Journal: Microeconomics, August 2013

Payment card networks, such as Visa, require merchants' banks to pay substantial "interchange" fees to cardholders' banks, on a per transaction basis. This paper shows that a network's profit-maximizing fee induces an inefficient price structure, over...

Time and State Dependence in an Ss Decision Experiment

By Jacopo Magnani, Aspen Gorry, and Ryan Oprea

American Economic Journal: Macroeconomics, January 2016

Flow earnings in a laboratory experiment decline the further a Brownian state variable, z, evolves from its optimal level, z*. Optimal state dependent models predict subjects will pay a fixed cost to return z to z* only when z strays outside a critical in...

Segregation and Homeownership in the Early Twentieth Century

By Trevon D. Logan and John M. Parman

American Economic Review, May 2017

We use new county-level segregation estimates for the period of 1880 to 1940 to document a general rise in residential segregation in both urban and rural counties occurring alongside rising homeownership rates. However, we find a negative correlation bet...

Competitive Pressure and the Adoption of Complementary Innovations

By Tobias Kretschmer, Eugenio J. Miravete, and José C. Pernías

American Economic Review, June 2012

Liberalization of the European automobile distribution system in 2002 limits the ability of manufacturers to impose vertical restraints, leading to a substantial increase in competitive pressure among dealers. We estimate an equilibrium model of profit ...

Symposium on the State and Economic Development

[Symposium: The State and Economic Development]

By Pranab Bardhan

Journal of Economic Perspectives, Summer 1990

The role of the state in economic development is one of the oldest topics in economics, yet controversies rage with similar passion and camps are divided on lines today broadly similar to the early writings. Though the authors of the papers in this sympos...

Currency Fluctuations in the Post-Bretton Woods Era

By Richard Meese

Journal of Economic Perspectives, Winter 1990

The international monetary landscape that has emerged since the felling of Bretton Woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float. This system has relatively...