Notes

Journal of Economic Perspectives, Fall 2012

Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion

By Susan M. Dynarski

American Economic Review, March 2003

Robustness and Linear Contracts

By Gabriel Carroll

American Economic Review, February 2015

We consider a moral hazard problem where the principal is uncertain as to what the agent can and cannot do: she knows some actions available to the agent, but other, unknown actions may also exist. The principal demands robustness, evaluating possible ...

Obvious Ex Post Equilibrium

By Shengwu Li

American Economic Review, May 2017

I propose a new solution concept, obvious ex post (OXP) equilibrium. This is a formal standard of cognitive simplicity for mechanisms, in settings with interdependent values. Under some standard assumptions, the ascending auction has an efficient OXP equi...

JEL Classification System

Journal of Economic Literature, December 2017

Economic Methodology in a Nutshell

By Daniel M. Hausman

Journal of Economic Perspectives, Spring 1989

This essay is a tendentious survey of standard methodological literature, focusing on the empirical appraisal of theory, microeconomic theory in particular. I shall in particular discuss four approaches to praising or damning microeconomic theory that hav...

Intellectual Property Rights, the Industrial Revolution, and the Beginnings of Modern Economic Growth

By Joel Mokyr

American Economic Review, May 2009

Guns, Latrines, and Land Reform: Dynamic Pigouvian Taxation

By Michael Kremer and Jack Willis

American Economic Review, May 2016

Dynamically and statically optimal Pigouvian subsidies and taxes on durables will differ in a growing economy. In a dynamic game, consumers may delay purchasing durables with positive externalities, such as latrines, anticipating greater future subsidies....

Formal Contracts, Relational Contracts, and the Threat-Point Effect

By Hideshi Itoh and Hodaka Morita

American Economic Journal: Microeconomics, August 2015

We investigate whether formal contracts can help in resolving the holdup problem by studying repeated transactions between a seller and a buyer. Contrary to previous findings, we demonstrate that a simple fixed-price contract based on product delivery is ...

Do We Really Know That the WTO Increases Trade? Reply

By Andrew K. Rose

American Economic Review, December 2007

Contracts, Hold-Up, and Exports: Textiles and Opium in Colonial India

By Rachel Kranton and Anand V. Swamy

American Economic Review, June 2008

Trade and export, it is argued, spur economic growth. This paper studies the microeconomics of exporting. We build a heuristic model of transactions between exporters and producers and relate it to East India Company (EIC) operations in colonial Bengal...

Political Aid Cycles

By Michael Faye and Paul Niehaus

American Economic Review, December 2012

Researchers have scrutinized foreign aid's effects on poverty and growth, but anecdotal evidence suggests that donors often use aid for other ends. We test whether donors use bilateral aid to influence elections in developing countries. We find that recip...

Why Are Power Plants in India Less Efficient Than Power Plants in the United States?

By Hei Sing (Ron) Chan, Maureen L. Cropper, and Kabir Malik

American Economic Review, May 2014

India's coal-fired generating capacity doubled between 1990 and 2010 and currently accounts for 70 percent of electricity produced. Despite this, thermal efficiency at state-owned coal-fired power plants in India is significantly lower than at plants in t...

Estimating the Effect of Unearned Income on Labor Earnings, Savings, and Consumption: Evidence from a Survey of Lottery Players

By Guido W. Imbens, Donald B. Rubin, and Bruce I. Sacerdote

American Economic Review, September 2001

This paper provides empirical evidence about the effect of unearned income on earnings, consumption, and savings. Using an original survey of people playing the lottery in Massachusetts in the mid-1980s, we analyze the effects of the magnitude of lottery ...

Income Taxes, Compensating Differentials, and Occupational Choice: How Taxes Distort the Wage-Amenity Decision

By David Powell and Hui Shan

American Economic Journal: Economic Policy, February 2012

The link between taxes and occupational choices is central for understanding the welfare impacts of income taxes. Just as taxes distort the labor-leisure decision, they may also distort the wage-amenity decision. Yet, there have been few studies on the fu...

Grade Inflation and Course Choice

By Richard Sabot and John Wakeman-Linn

Journal of Economic Perspectives, Winter 1991

A conflict exists between the incentives offered to students and the institutional goal of increased science and math education. Students make their course choices in response to a powerful set of incentives: grades. These incentives have been systematica...

An Approach to Incorporating Psychology into Economics

By Matthew Rabin

American Economic Review, May 2013

This article proposes an approach to improving the psychological realism of economics while maintaining its conventional techniques and goals--formal theoretical and empirical analysis using tractable models, with a focus on prediction and estimation. Bes...

Global Imbalances: Globalization, Demography, and Sustainability

[Symposium: U.S. Trade Deficit]

By Richard N. Cooper

Journal of Economic Perspectives, Summer 2008

The current account deficit of the United States has been large in recent years, both in absolute size and relative to GDP. In 2006, it reached $811 billion, 6.1 percent of GDP. It has become a dominant feature of the world economy; if you sum up the curr...

Fiscal Stimulus in a Monetary Union: Evidence from US Regions

By Emi Nakamura and Jón Steinsson

American Economic Review, March 2014

We use rich historical data on military procurement to estimate the effects of government spending. We exploit regional variation in military build-ups to estimate an "open economy relative multiplier" of approximately 1.5. We develop a framework for inte...

Shutting Down the Thermohaline Circulation

By David Anthoff, Francisco Estrada, and Richard S. J. Tol

American Economic Review, May 2016

Past climatic changes were caused by a slowdown of the thermohaline circulation. We use results from experiments with three climate models to show that the expected cooling due to a slowdown of the thermohaline circulation is less in magnitude than the ex...