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 ...

Understanding PPPs and PPP-Based National Accounts: Comment

By Martin Ravallion

American Economic Journal: Macroeconomics, October 2010

The Contribution of Large and Small Employers to Job Creation in Times of High and Low Unemployment

By Giuseppe Moscarini and Fabien Postel-Vinay

American Economic Review, October 2012

We document a negative correlation, at business cycle frequencies, between the net job creation rate of large employers and the level of aggregate unemployment that is much stronger than for small employers. The differential growth rate of employment betw...

The Home-Market Effect and Bilateral Trade Patterns

By Gordon H. Hanson and Chong Xiang

American Economic Review, September 2004

We develop a monopolistic-competition model of trade with many industries to examine how home-market effects vary with industry characteristics. Industries with high transport costs and more differentiated products tend to be more concentrated in large co...

Markets: Beer in Germany and the United States

By William James Adams

Journal of Economic Perspectives, Winter 2006

Between 1950 and 2000, the four-firm producer-concentration ratio for beer increased from 22 to 95 in the United States; and Anheuser-Busch's share of domestic output ballooned from 6 to 54 percent. In Germany, concentration has risen, but it remains low....

Payment Choice, Image Motivation and Contributions to Charity: Evidence from a Field Experiment

By Adriaan R. Soetevent

American Economic Journal: Economic Policy, February 2011

This paper examines the impact of payment choice on charitable giving with a door-to-door fund-raising field experiment. Respondents can donate cash only, use debit only, or have both options. Cash donations have lower visibility vis-à-vis solicit...