Prefunding Medicare

By Martin Feldstein

American Economic Review, May 1999

Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model

By Rüdiger Bachmann, Ricardo J. Caballero, and Eduardo M. R. A. Engel

American Economic Journal: Macroeconomics, October 2013

The sensitivity of US aggregate investment to shocks is procyclical. The response upon impact increases by approximately 50 percent from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lum...

Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China

By Zhangkai Huang, Lixing Li, Guangrong Ma, and Lixin Colin Xu

American Economic Review, August 2017

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the ...

Interjurisdictional Spillovers, Decentralized Policymaking, and the Elasticity of Capital Supply

By Thomas Eichner and Marco Runkel

American Economic Review, August 2012

This paper points to the important role that the elasticity of aggregate capital supply with respect to the net rate of return to capital plays for the efficiency of policymaking in a decentralized economy with mobile capital and spillovers among jurisdic...

Gender Differences in Wealth at Retirement

By Urvi Neelakantan and Yunhee Chang

American Economic Review, May 2010

Can Portfolio Rebalancing Explain the Dynamics of Equity Returns, Equity Flows, and Exchange Rates?

By Harald Hau and Hélène Rey

American Economic Review, May 2004

Optimal Contracting with Endogenous Social Norms

By Paul Fischer and Steven Huddart

American Economic Review, September 2008

Research in sociology and ethics suggests that individuals adhere to social norms of behavior established by their peers. Within an agency framework, we model endogenous social norms by assuming that each agent’s cost of implementing an action depend...

Price Reaction to Information with Heterogeneous Beliefs and Wealth Effects: Underreaction, Momentum, and Reversal

By Marco Ottaviani and Peter Norman Sørensen

American Economic Review, January 2015

This paper analyzes how asset prices in a binary market react to information when traders have heterogeneous prior beliefs. We show that the competitive equilibrium price underreacts to information when there is a bound to the amount of money traders are ...

Stakes Matter in Ultimatum Games

By Steffen Andersen, Seda Ertaç, Uri Gneezy, Moshe Hoffman, and John A. List

American Economic Review, December 2011

One of the most robust findings in experimental economics is that individuals in one-shot ultimatum games reject unfair offers. Puzzlingly, rejections have been found robust to substantial increases in stakes. By using a novel experimental design that eli...

Technological Revolutions and Stock Prices

By Ľuboš Pástor and Pietro Veronesi

American Economic Review, September 2009

We develop a general equilibrium model in which stock prices of innovative firms exhibit "bubbles" during technological revolutions. In the model, the average productivity of a new technology is uncertain and subject to learning. During technological r...

China's Exchange Rate Policy Dilemma

By Morris Goldstein and Nicholas Lardy

American Economic Review, May 2006

Stochastic Choice: An Optimizing Neuroeconomic Model

By Michael Woodford

American Economic Review, May 2014

A model is proposed in which stochastic choice results from noise in cognitive processing rather than random variation in preferences. The mental process used to make a choice is nonetheless optimal, subject to a constraint on available information-proces...

Capital Account Liberalization: Theory, Evidence, and Speculation

By Peter Blair Henry

Journal of Economic Literature, December 2007

Research on the macroeconomic impact of capital account liberalization finds few, if any, robust effects of liberalization on real variables. In contrast to the prevailing wisdom, I argue that the textbook theory of liberalization holds up quite well to...

Export Versus FDI with Heterogeneous Firms

By Elhanan Helpman, Marc J. Melitz, and Stephen R. Yeaple

American Economic Review, March 2004

Zeros, Quality, and Space: Trade Theory and Trade Evidence

By Richard Baldwin and James Harrigan

American Economic Journal: Microeconomics, May 2011

Bilateral, product-level data exhibit a number of strong patterns that can be used to evaluate international trade theories, notably the spatial incidence of "export zeros" (correlated with distance and importer size), and of export unit values (positivel...

Retrospectives: Eugenics and Economics in the Progressive Era

By Thomas C. Leonard

Journal of Economic Perspectives, Fall 2005

During the Progressive Era, eugenic approaches to social and economic reform were popular, respectable and widespread. This essay documents the influence of eugenic ideas upon American economic reform, especially in the areas of immigration and labor refo...

Income, the Earned Income Tax Credit, and Infant Health

By Hilary Hoynes, Doug Miller, and David Simon

American Economic Journal: Economic Policy, February 2015

This paper uses quasi-experimental variation from federal tax reform to evaluate the effect of the EITC on infant health outcomes. We find that the EITC reduces the incidence of low birth weight and increases mean birth weight: a $1,000 treatment-on-the-t...

Long-Term Educational Consequences of Secondary School Vouchers: Evidence from Administrative Records in Colombia

By Joshua Angrist, Eric Bettinger, and Michael Kremer

American Economic Review, June 2006

Colombia's PACES program provided over 125,000 poor children with vouchers that covered the cost of private secondary school. The vouchers were renewable annually conditional on adequate academic progress. Since many vouchers were assigned by lottery, pro...

The Effect of Disability Insurance Receipt on Labor Supply

By Eric French and Jae Song

American Economic Journal: Economic Policy, May 2014

This paper exploits the effectively random assignment of judges to Disability Insurance cases to estimate the causal impact of Disability Insurance receipt on labor supply. We find that benefit receipt reduces labor force participation by 26 percentage...

Stability and Strategy-Proofness for Matching with Constraints: A Problem in the Japanese Medical Match and Its Solution

By Yuichiro Kamada and Fuhito Kojima

American Economic Review, May 2012

Real matching markets are subject to constraints. For example, the Japanese government introduced a new medical matching system in 2009 that imposes a "regional cap" in each of its 47 prefectures, which regulates the total number of medical residents who ...