-
Talent, Geography, and Offshore R&D Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-12 Jingting Fan
I model and quantify the impact of a new dimension of globalization: offshore R&D. In the model, firms employ researchers across the globe to develop new product blueprints and then engage in offshore production and exporting. Frictions impeding trade and the separation of production from R&D lead to a ‘market-access’ motive for offshore R&D, while cross-country differences in the distributions of
-
U.S. Market Concentration and Import Competition Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-12 Mary Amiti, Sebastian Heise
Many studies have documented that the sales concentration of U.S. producers has risen in recent decades. In this paper, we show that this increase was accompanied by more entry and growth of foreign competitors. Using confidential census data covering the universe of all firm sales in the U.S. manufacturing sector, we find that rising import competition increased concentration among U.S. firms by reallocating
-
Policy Targeting under Network Interference Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-10 Davide Viviano
This paper studies the problem of optimally allocating treatments in the presence of spillover effects, using information from a (quasi-)experiment. I introduce a method that maximizes the sample analog of average social welfare when spillovers occur. I construct semi-parametric welfare estimators with known and unknown propensity scores and cast the optimization problem into a mixed-integer linear
-
The Macroeconomics of Supply Chain Disruptions Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-10 Daron Acemoglu, Alireza Tahbaz-Salehi
This paper develops a model to study the macroeconomic implications of supply chain disruptions with three key ingredients: (i) a firm-level network of customized supplier-customer links that generate relationship-specific productivity gains; (ii) bargaining over these relationship-specific surpluses; and (iii) an extensive margin of adjustment, whereby firms decide to form or sever relations with
-
Structural Change, Elite Capitalism, and the Emergence of Labor Emancipation Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-10 Quamrul H Ashraf, Francesco Cinnirella, Oded Galor, Boris Gershman, Erik Hornung
This study argues that the decline of coercive labor institutions over the course of industrialization was partly driven by complementarity between physical capital and effective labor in manufacturing. Given the difficulty of extracting labor effort in care-intensive industrial tasks through monitoring and punishment, capital-owning elites ultimately chose to emancipate workers to induce their supply
-
Dynamic Perturbation Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-09 Alessandro Mennuni, Juan F Rubio-Ramirez, Serhiy Stepanchuk
We present a novel algorithm called Dynamic Perturbation for solving large-scale macroeconomic models. Our approach involves computing first-order Taylor expansions of the policy functions along the entire equilibrium path. This method applies to a wide range of models and offers significantly higher accuracy than traditional perturbation approaches. Remarkably, even when utilizing first-order approximations
-
Shallow Meritocracy Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-08 Peter Andre
Meritocracies aspire to reward hard work and promise not to judge individuals by the circumstances into which they were born. However, circumstances often shape the choice to work hard. I show that people's merit judgments are ``shallow'' and insensitive to this effect. They hold others responsible for their choices, even if these choices have been shaped by unequal circumstances. In an experiment
-
Interview Sequences and the Formation of Subjective Assessments Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-08 Jonas Radbruch, Amelie Schiprowski
Interviewing is a decisive stage of most processes that match candidates to firms and organizations. This paper studies how and why a candidate's interview outcome depends on the other candidates interviewed by the same evaluator. We use large-scale data from high-stakes admission and hiring processes, where candidates are quasi-randomly assigned to evaluators and time slots. We find that the individual
-
The Heterogeneous Effects of Government Spending: It's All About Taxes Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-04-02 Axelle Ferriere, Gaston Navarro
Historically, large changes in U.S. government spending induced fiscal efforts that were not all alike, with some using more progressive taxes than others. We develop a heterogeneous-agent New Keynesian model to analyze how the distribution of taxes across households shapes spending multipliers. The model yields empirically realistic distributions in marginal propensities to consume and labor elasticities
-
International Comovement in the Global Production Network Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-03-29 Zhen Huo, Andrei Levchenko, Nitya Pandalai-Nayar
This paper provides a general framework to study the role of production networks in international GDP comovement. We first derive an additive decomposition of bilateral GDP comovement into components capturing shock transmission and shock correlation. We quantify this decomposition in a parsimonious multi-country, multi-sector dynamic network propagation model, using data for the G7 countries over
-
Partially Linear Models Under Data Combination Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-03-29 X D'Haultfoeuille, C Gaillac, A Maurel
We study partially linear models when the outcome of interest and some of the covariates are observed in two different datasets that cannot be linked. This type of data combination problem arises very frequently in empirical microeconomics. Using recent tools from optimal transport theory, we derive a constructive characterization of the sharp identified set. We then build on this result and develop
-
Transhumant Pastoralism, Climate Change and Conflict in Africa Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-03-12 Eoin F McGuirk, Nathan Nunn
We consider the effects of climate change on seasonally migrant populations that herd livestock—i.e., transhumant pastoralists—in Africa. Traditionally, transhumant pastoralists benefit from a cooperative relationship with sedentary agriculturalists whereby arable land is used for crop farming in the wet season and animal grazing in the dry season. Rainfall scarcity can disrupt this arrangement by
-
Good Politicians: Experimental Evidence on Motivations for Political Candidacy and Government Performance Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-03-12 Saad Gulzar, Muhammad Yasir Khan
How can we motivate good politicians – those that will carry out policy that is responsive to citizens' preferences – to enter politics? In a field experiment in Pakistan, we vary how political office is portrayed to ordinary citizens. Emphasizing prosocial motives for holding political office instead of personal returns – such as the ability to help others versus enhancing one's own respect and status
-
Too Domestic to Fail Liquidity Provision and National Champions Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-03-11 Emmanuel Farhi, Jean Tirole
Authorities’ support policies shape the location and continuation of industrial and banking activity on their soil. Firms’ locus of activity depends on their prospect of receiving financial assistance in distress and therefore on factors such as countries’ relative resilience. We predict that global firms are global in life and national in death; and that they become less global when competition is
-
Adaptive Estimation and Uniform Confidence Bands for Nonparametric Structural Functions and Elasticities Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-03-07 Xiaohong Chen, Timothy Christensen, Sid Kankanala
We introduce two data-driven procedures for optimal estimation and inference in nonparametric models using instrumental variables.The first is a data-driven choice of sieve dimension for a popular class of sieve two-stage least squares estimators. When implemented with this choice, estimators of both the structural function h0 and its derivatives (such as elasticities) converge at the fastest possible
-
Private Sector Provision as an “Escape Valve”: The Mexico Diabetes Experiment Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-03-01 Ari Bronsoler, Jonathan Gruber, Enrique Seira
Public health systems are dominant in much of the world, but often face fiscal constraints that lead to rationing of care. As a result, private sector healthcare providers could in theory beneficially supplement public systems, but evaluating the benefits of private alternatives has been challenging. We evaluate a private supplement to the free public health system for one of the world’s deadliest
-
Surviving Competition Neighborhood Shops vs. Convenience Chains Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-27 Miguel Ángel Talamas Marcos
Hundreds of millions of microenterprises in emerging economies face increased competition from the entry and expansion of large firms that offer similar products. This paper examines the impacts of the opening of chain-run convenience stores on one of the world’s most ubiquitous microenterprises: owner-operated shops. To address endogeneity in time and location of chains’ opening, I pair two-way fixed
-
Reservation Raises: The Aggregate Labor Supply Curve at the Extensive Margin Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-27 Preston Mui, Benjamin Schoefer
We measure desired labor supply at the extensive (employment) margin in two representative surveys of the U.S. and German populations. We elicit reservation raises: the percent wage change that renders a given individual indifferent between employment and nonemployment. It is equal to her reservation wage divided by her actual, or potential, wage. The reservation raise distribution is the nonparametric
-
The Causal Impact of Socio-Emotional Skills Training on Educational Success Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-20 Giuseppe Sorrenti, Ulf Zölitz, Denis Ribeaud, Manuel Eisner
We study the long-term effects of a randomized intervention targeting children’s socio-emotional skills. The classroom-based intervention for primary school children has positive impacts that persist for over a decade. Treated children become more likely to complete academic high school and enroll in university. Two mechanisms drive these results. Treated children show fewer ADHD symptoms: they are
-
Robust Implementation with Costly Information Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-20 Harry Pei, Bruno Strulovici
We construct mechanisms that can robustly implement any desired social choice function when (i) agents may incur a cost to learn the state of the world, (ii) with small probability, agents’ preferences can be arbitrarily different from some baseline known to the mechanism designer, and (iii) the mechanism designer does not know agents’ beliefs and higher-order beliefs about one another's preferences
-
Labor Market Screening and the Design of Social Insurance: An Equilibrium Analysis of the Labor Market for the Disabled Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-17 Naoki Aizawa, Soojin Kim, Serena Rhee
This paper studies how firms’ screening incentives in the labor market affect the optimal design of social insurance programs and quantitatively assesses the U.S. disability policies accounting for firms’ screening of the disabled. We develop an equilibrium search model where workers with different productivities have heterogeneous preferences over non-wage benefits and firms cannot offer an employment
-
Optimal Allocation via Waitlists: Simplicity Through Information Design Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-07 Itai Ashlagi, Faidra Monachou, Afshin Nikzad
We study nonmonetary markets where objects that arrive over time are allocated to unit-demand agents with private types, such as in the allocation of public housing or deceased-donor organs. An agent’s value for an object is supermodular in her type and the object quality, and her payoff is her value minus her waiting cost. The social planner's objective is a weighted sum of allocative efficiency (i
-
Revisiting Event-Study Designs: Robust and Efficient Estimation Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-06 Kirill Borusyak, Xavier Jaravel, Jann Spiess
We develop a framework for difference-in-differences designs with staggered treatment adoption and heterogeneous causal effects. We show that conventional regression-based estimators fail to provide unbiased estimates of relevant estimands absent strong restrictions on treatment-effect homogeneity. We then derive the efficient estimator addressing this challenge, which takes an intuitive “imputation”
-
A Dynamic Model of Input-Output Networks Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-02-01 Ernest Liu, Aleh Tsyvinski
We develop a dynamic model of input-output networks that incorporates adjustment costs of changing inputs. Our closed-form solution for the dynamics of the economy shows that temporary shocks to upstream sectors, whose output travels through long supply chains, have disproportionately significant welfare impact compared to affected sectors’ Domar weights. We conduct a spectral analysis of the U.S.
-
The Climate in Climate Economics Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-01-30 Doris Folini, Aleksandra Friedl, Felix Kübler, Simon Scheidegger
To analyze climate change mitigation strategies, economists rely on simplified climate models – so-called climate emulators – that provide a realistic quantitative link between CO2 emissions and global warming at low computational costs. In this paper, we propose a generic and transparent calibration and evaluation strategy for these climate emulators that is based on freely and easily accessible state-of-the-art
-
Marriage Market and Labor Market Sorting Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-01-29 Paula Calvo, Ilse Lindenlaub, Ana Reynoso
We develop a new equilibrium model in which households’ labor supply choices form the link between sorting on the marriage market and sorting on the labor market. We first show that in theory, the nature of home production—whether partners’ hours are complements or substitutes—shapes equilibrium labor supply as well as marriage and labor market sorting. We then estimate our model using German data
-
The Work-From-Home Technology Boon and its Consequences Rev. Econ. Stud. (IF 7.833) Pub Date : 2024-01-25 Morris A Davis, Andra C Ghent, Jesse Gregory
We study the impact of widespread adoption of work-from-home (WFH) technology using an equilibrium model where people choose where to live, how to allocate their time between working at home and at the office, and how much space to use in production. Motivated by cross-sectional evidence on WFH, we model WFH as a complement to work at the office. Simulations of the model indicate that the pandemic
-
Measuring Diffusion over a Large Network Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-12-18 Xiaoqi He, Kyungchul Song
Abstact This paper introduces a measure of the diffusion of binary outcomes over a large, sparse network, when the diffusion is observed in two time periods. The measure captures the aggregated spillover effect of the state-switches in the initial period on their neighbors’ outcomes in the second period. This paper introduces a causal network that captures the causal connections among the cross-sectional
-
A Model of Online Misinformation Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-12-12 Daron Acemoglu, Asuman Ozdaglar, James Siderius
We present a model of online content sharing where agents sequentially observe an article and decide whether to share it with others. This content may or may not contain misinformation. Each agent starts with an ideological bias and gains utility from positive social media interactions but does not want to be called out for propagating misinformation. We characterize the (Bayesian-Nash) equilibria
-
Decomposing Duration Dependence in a Stopping Time Model Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-12-08 Fernando Alvarez, Katarína Borovičkoá, Robert Shimer
We develop an economic model of transitions in and out of employment. Heterogeneous workers switch employment status when the net benefit from working, a Brownian motion with drift, hits optimally-chosen barriers. This implies that the duration of jobless spells for each worker has an inverse Gaussian distribution. We allow for arbitrary heterogeneity across workers and prove that the distribution
-
Endogenous Uncertainty and Credit Crunches Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-11-29 Ludwig Straub, Robert Ulbricht
We develop a theory of endogenous uncertainty in which the ability of investors to learn about firm-level fundamentals is impaired during financial crises. At the same time, higher uncertainty reinforces financial distress. Through this two-way feedback loop, a temporary financial shock can cause a persistent reduction in risky lending, output, and employment that coincides with increased uncertainty
-
Dollar Safety and the Global Financial Cycle Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-11-26 Zhengyang Jiang, Arvind Krishnamurthy, Hanno Lustig
We develop a model of the global financial cycle with one key ingredient: the international demand for safe dollar assets. The model matches patterns of dollar borrowing and currency mismatch, the U.S. external balance sheet, exorbitant privilege, spillovers of the U.S. monetary policy to the rest of the world, and the dollar as a global risk factor. In doing so, we lay out a novel transmission mechanism
-
How Credit Constraints Impact Job Finding Rates, Sorting & Aggregate Output Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-11-24 Kyle Herkenhoff, Gordon Phillips, Ethan Cohen-Cole
How do consumer credit markets affect the allocation of workers to firms, output, and labor productivity? We address this question in two steps. First, we use new microdata to estimate empirical elasticities of job search patterns to credit. Second, we estimate our novel theory of sorting under risk aversion to match these elasticities, and then we conduct aggregate counterfactuals. Empirically, we
-
Bargaining as a Struggle Between Competing Attempts at Commitment Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-11-07 Rohan Dutta
The strategic importance of commitment in bargaining is widely acknowledged. Yet disentangling its role from key features of canonical models, such as proposal power and reputational concerns, is difficult. This paper introduces a model of bargaining with strategic commitment at its core. Following Schelling (1956), commitment ability stems from the costly nature of concession and is endogenously determined
-
Capital Regulation and Shadow Finance: A Quantitative Analysis Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-11-07 Hyunju Lee, Sunyoung Lee, Radoslaw Paluszynski
This paper studies the effects of higher bank capital requirements. Using new firm-lender matched credit data from South Korea, we document that Basel III coincided with a 25% decline in credit from regulated banks, and an increase of similar magnitude from nonbank (shadow) lenders. We use our data to estimate the effect of capital requirements on bank credit, and the spillover effect of the reform
-
Contingent Thinking and the Sure-Thing Principle: Revisiting Classic Anomalies in the Laboratory Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-10-24 Ignacio Esponda, Emanuel Vespa
We present an experimental framework to study the extent to which failures of contingent thinking explain classic anomalies in a broad class of environments, including overbidding in auctions and the Ellsberg paradox. We study environments in which the subject’s choices affect payoffs only in some states, but not in others. We find that anomalies are in large part driven by incongruences between choices
-
Single-Crossing Differences in Convex Environments Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-10-24 Navin Kartik, SangMok Lee, Daniel Rappoport
An agent’s preferences depend on an ordered parameter or type. We characterize the set of utility functions with single-crossing differences (SCD) in convex environments. These include preferences over lotteries, both in expected utility and rankdependent utility frameworks, and preferences over bundles of goods and over consumption streams. Our notion of SCD does not presume an order on the choice
-
Incorporating Diagnostic Expectations into the New Keynesian Framework Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-10-19 Jean-Paul L'Huillier, Sanjay R Singh, Donghoon Yoo
Diagnostic expectations constitute a realistic behavioral model of inference. This paper shows that this approach to expectation formation can be productively integrated into the New Keynesian framework. Diagnostic expectations generate endogenous extrapolation in general equilibrium. We show that diagnostic expectations generate extra amplification in the presence of nominal frictions; a fall in aggregate
-
Multi-Dimensional Screening: Buyer-Optimal Learning and Informational Robustness Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-10-17 Rahul Deb, Anne-Katrin Roesler
A monopolist seller of multiple goods screens a buyer whose type vector is initially unknown to both but drawn from a commonly known prior distribution. The seller chooses a mechanism to maximize her worst-case profits against all possible signals from which the buyer can learn about his values for the goods. We show that it is robustly optimal for the seller to bundle goods with identical demands
-
Unequal Expenditure Switching: Evidence From Switzerland Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-10-03 Raphael Auer, Ariel Burstein, Sarah Lein, Jonathan Vogel
What are the unequal effects of changes in consumer prices on the cost of living? In the context of changes in import prices (driven by, e.g., changes in trade costs or exchange rates), most analyses focus on variation across households in initial expenditure shares on imported goods. However, the unequal welfare effects of non-marginal foreign price changes also depend on differences in how consumers
-
Path Dependency in Physician Decisions Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-09-25 Lawrence Jin, Rui Tang, Han Ye, Junjian Yi, Songfa Zhong
We examine path dependency in physician decisions in an emergency department setting, and find that physicians’ treatment decisions for the current and previous patients are positively correlated. We show that the positive autocorrelation is higher when the current patient is of greater medical uncertainty or more similar to the previous patient in terms of observed characteristics and when the physician
-
Fixed Effects and the Generalized Mundlak Estimator Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-09-05 Dmitry Arkhangelsky, Guido W Imbens
We develop a new approach for estimating average treatment effects in observational studies with unobserved group-level heterogeneity. We consider a general model with group-level unconfoundedness and provide conditions under which aggregate balancing statistics – group-level averages of functions of treatments and covariates – are sufficient to eliminate differences between groups. Building on these
-
Market Power in Coal Shipping and Implications for U.S. Climate Policy Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-09-05 Louis Preonas
Economists have widely endorsed pricing CO2 emissions to internalize climate changerelated externalities. Doing so would significantly affect coal, the most carbon-intensive energy source. However, U.S. coal markets exhibit an additional distortion: the railroads that transport coal to power plants can exert market power. This paper estimates how coal-by-rail markups respond to changes in coal demand
-
Negative Nominal Interest Rates and the Bank Lending Channel Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-09-05 Gauti B Eggertsson, Ragnar E Juelsrud, Lawrence H Summers, Ella Getz Wold
We investigate the bank lending channel of negative nominal policy rates from an empirical and theoretical perspective. For the empirical results we rely on Swedish data, including daily banklevel lending rates. We find that retail household deposit rates are subject to a lower bound (DLB). Empirically, once the DLB is met, the pass-through to mortgage lending rates and credit volumes is substantially
-
Minimum Wage Employment Effects and Labor Market Concentration Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-09-05 José Azar, Emiliano Huet-Vaughn, Ioana Marinescu, Bledi Taska, Till von Wachter
This paper shows that more highly concentrated labor markets experience more positive employment effects of the minimum wage. In the most concentrated labor markets, employment rises following a minimum wage increase. The paper establishes its main findings studying the effects of local minimum wage increases on a key low-wage retail sector, and using data on labor market concentration that covers
-
Strategic Exploration: Preemption and Prioritization Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-08-22 Qingmin Liu, Yu Fu Wong
This paper analyzes a model of strategic exploration in which competing players independently explore a set of alternatives. The model features a multiple-player multiple-armed bandit problem and captures a strategic trade-off between preemption—covert exploration of alternatives that the opponent will explore in the future—and prioritization—exploration of the most promising alternatives. Our results
-
On the Use of Outcome Tests for Detecting Bias in Decision Making Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-08-22 Ivan A Canay, Magne Mogstad, Jack Mountjoy
The decisions of judges, lenders, journal editors, and other gatekeepers often lead to significant disparities across affected groups. An important question is whether, and to what extent, these group-level disparities are driven by relevant differences in underlying individual characteristics, or by biased decision makers. Becker (1957, 1993) proposed an outcome test of bias based on differences in
-
Which Investors Matter for Equity Valuations and Expected Returns? Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-08-21 Ralph S J Koijen, Robert J Richmond, Motohiro Yogo
Based on an asset demand system, we develop a framework to quantify the impact of market trends and changes in regulation on asset prices, price informativeness, and the wealth distribution. Our leading applications are the transition from active to passive investment management and climate-induced shifts in asset demand. The transition from active to passive investment management had a large impact
-
Continuous-Time Games with Imperfect and Abrupt Information Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-08-16 Benjamin Bernard
This paper studies two-player games in continuous time with imperfect public monitoring, in which information may arrive both gradually and continuously, governed by a Brownian motion, and abruptly and discontinuously, according to Poisson processes. For this general class of two-player games, we characterize the equilibrium payoff set via a convergent sequence of differential equations. The differential
-
Sources and Transmission of Country Risk Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-08-16 Tarek A Hassan, Jesse Schreger, Markus Schwedeler, Ahmed Tahoun
We use textual analysis of earnings conference calls held by listed firms around the world to measure the amount of risk managers and investors at each firm associate with each country at each point in time. Flexibly aggregating this firm-country-quarter-level data allows us to systematically identify spikes in perceived country risk (“crises”) and document their source and pattern of transmission
-
Superiority-Seeking and the Preference for Exclusion Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-08-16 Alex Imas, Kristó f Madarász
We propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. We term this motive imitative superiority-seeking, and show that it generates preferences for exclusion that help explain a host of market anomalies and make novel predictions in a variety of domains. In bilateral exchange, there is a reluctance to trade, leading to an
-
The Transmission of Commodity Price Super-Cycles Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-08-10 Felipe Benguria, Felipe Saffie, Sergio Urzua
We examine two key channels through which commodity price super-cycles affect the economy: a wealth channel, through which higher commodity prices increase domestic demand, and a cost channel, through which they induce wage increases. By exploiting regional variation in exposure to commodity price shocks and administrative firm-level data from Brazil, we empirically disentangle these transmission channels
-
How Exporters Grow Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-21 Doireann Fitzgerald, Stefanie Haller, Yaniv Yedid-Levi
We use customs data for Irish firms to show that in successful episodes of export market entry, there are statistically and economically significant post-entry dynamics of quantities, but not of mark-ups. To match these moments, we structurally estimate a model where firms can invest in future customer base through two channels: by selling more today, and by spending on marketing and advertising. Our
-
Reserve Accumulation, Macroeconomic Stabilization, and Sovereign Risk Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-19 Javier Bianchi, César Sosa-Padilla
In the past three decades, governments in emerging markets have accumulated large amounts of international reserves, especially those with fixed exchange rates. This paper proposes a theory of reserve accumulation that can account for these facts. Using a model of endogenous sovereign default with nominal rigidities, we argue that the interaction between sovereign risk and aggregate demand amplification
-
The Effect of Wealth on Worker Productivity Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-17 Jan Eeckhout, Alireza Sepahsalari
We propose a theory that analyzes how a workers’ asset holdings affect their job productivity. In a labor market with uninsurable risk, workers choose to direct their job search trading off productivity and wages against unemployment risk. Workers with low asset holdings have a precautionary job search motive, they direct their search to low productivity jobs because those offer a low risk at the cost
-
How Responsive are Wages to Firm-Specific Changes in Labor Demand? Evidence from Idiosyncratic Export Demand Shocks Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-12 Andrew Garin, Filipe Silvério
Do firms adjust wages in response to changes in their own demand level, or to changes in competitive pressure from rival employers? We study how exporters adjust wages in response to unexpected product demand shocks during the 2008–2009 Great Recession. Using rich data on Portuguese firms’ pre-recession export shipments, we measure firm-level shocks to export demand during the Recession. We show that
-
Dynamic Opinion Aggregation: Long-Run Stability and Disagreement Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-11 Simone Cerreia-Vioglio, Roberto Corrao, Giacomo Lanzani
This paper proposes a model of non-Bayesian social learning in networks that accounts for heuristics and biases in opinion aggregation. The updating rules are represented by nonlinear opinion aggregators from which we extract two extreme networks capturing strong and weak links. We provide graph-theoretic conditions for these networks that characterize opinions.convergence, consensus formation, and
-
Model Complexity, Expectations, and Asset Prices Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-10 Pooya Molavi, Alireza Tahbaz-Salehi, Andrea Vedolin
This paper analyzes how limits to the complexity of statistical models used by market participants can shape asset prices. We consider an economy in which the stochastic process that governs the evolution of economic variables may not have a simple representation, and yet, agents are only capable of entertaining statistical models with a certain level of complexity. As a result, they may end up with
-
When Less is More: Experimental Evidence on Information Delivery During India’s Demonetization Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-07 Abhijit Banerjee, Emily Breza, Arun G Chandrasekhar, Benjamin Golub
In disseminating information, policymakers face a choice between broadcasting to everyone and informing a small number of “seeds” who then spread the message. While broadcasting maximizes the initial reach of messages, we offer theoretical and experimental evidence that it need not be the best strategy. In a field experiment during the 2016 Indian demonetization, we delivered policy information, varying
-
Trust in Risk Sharing: A Double-Edged Sword Rev. Econ. Stud. (IF 7.833) Pub Date : 2023-07-06 Harold L Cole, Dirk Krueger, George J Mailath, Yena Park
We analyze efficient risk-sharing arrangements when the value from deviating is determined endogenously by another risk sharing arrangement. Coalitions form to insure against idiosyncratic income risk. Self-enforcing contracts for both the original coalition and any coalition formed (joined) after deviations rely on a belief in future cooperation which we term “trust”. We treat the contracting conditions