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This paper seeks to understand the drivers of country-level multi-factor productivity (MFP) with a special emphasis on product and labour market policies and the quality of institutions. For a panel of OECD countries, we find that anticompetitive product market regulations reduce MFP levels and that higher innovation intensity and greater openness result in higher MFP. We also find that the impact of product market regulations on MFP may depend on the level of labour market regulations. Better institutions, a more business friendly environment and lower barriers to trade and investment amplify the positive impact of R&D spending on MFP. Finally, we also show that cross-country MFP variations can be explained to a considerable extent by cross-country variation in labour market regulations, barriers to trade and investment and institutions. [ABSTRACT FROM AUTHOR]

This paper reexamines the behavior of inflation and unemployment and reaches four conclusions: 1) The U.S. Phillips curve is alive and well (at least as well as in the past). 2) Inflation expectations however have become steadily more anchored. 3) The slope of the curve has substantially declined. But the decline dates back to the 1980s rather than to the crisis. 4) The standard error of the residual in the relation is large, especially in comparison to the low level of inflation. Each of the four conclusions presents challenges for the conduct of monetary policy. [ABSTRACT FROM AUTHOR]

This article presents discusses the "American Economic Review." The author offers information regarding the editorial staff of the journal, the publication processes, and article submission statistics. Several charts are provided that describe the recent history of the journal's publication as well as the main topics of its articles.

Increasingly, economists are drawing on concepts from outside economics--such as 'norms,' 'esteem,' and 'identity'--to model agents' social natures. A key reason for studying such social motivation is to shed light on the conditions that facilitate--or deter--collective action. It has been widely observed, for instance, that groups are more able to engage in collective action when they have a common, group identity. This paper gives one explanation for such a link. The paper develops a new concept, 'we thinking'; and it also provides a deeper understanding of the concepts of norms, identity, and esteem. [ABSTRACT FROM AUTHOR]

The author focuses on editorial information and citation and journal impact statistics for the journal "American Economic Journal: Macroeconomics." He states the journal's mandate is the publication of studies concerning aggregate fluctuations and growth and policy in that context but will also welcome papers contributing to macroeconomics. He talks about the editorial submission process and the article includes tables with data on manuscript submission and publication, along with subject matter of published articles. He comments on citation and journal impact data which is maintained at the website http://ideas.repec.org/top/top.journals.rdiscount.html and mentions the journal's impact factor is among the top ten economic journals.

This paper examines optimal monetary policy in an open-economy two-country world with sticky prices under pricing to market. We show that currency misalignments are inefficient and lower world welfare. We find that optimal policy must target consumer price inflation, the output gap, and the currency misalignment. The paper derives the loss function of a cooperative monetary policymaker and the optimal targeting rules. The model is a modified version of Clarida, Galí, and Gertler ( JME, 2002). The key change is that we allow pricing to market or local-currency pricing and consider the policy implications of currency misalignments. JEL: E52, F31, F41 [ABSTRACT FROM AUTHOR]

The cultural gravity model proposed in this paper uses micro-level survey data of 21,000 households to estimate the contribution to cultural heterogeneity of a long history of division between the Ottoman, Habsburg, Russian or Prussian Empires since the year 1300 in 21 European countries. By exploiting the variation in the duration of integration of localities in different empires, this paper sheds light on the influence of political integration on cultural integration and on the rate of cultural change. History matters and cultural values change very slowly: long lasting effects on social trust comes after 400 years of common imperial rule. [ABSTRACT FROM AUTHOR]

This paper presents a list of the top 20 articles published in the American Economic Review during its first 100 years. This list was assembled in honor of the AER's one-hundredth anniversary by a group of distinguished economists at the request of AER's editor. A brief description accompanies the citations of each article. [ABSTRACT FROM AUTHOR]

This article presents a report from the editor for the "American Economic Journal: Microeconomics" (AEJ Micro). The article presents the mission statement of the journal and mentions that two issues of the journal were published in 2009. Statistics concerning these issues are also presented.

This article presents information about a symposium held on January 6, 2009 on economic education in the United States co-sponsored by the Council for Economic Education, the "Journal of Economic Education," and the Senesh Endowment in Economic Education at Purdue University. Discussions at the conference compared the precollege and undergraduate economic education initiatives and research in Australia, Japan, Korea, and Great Britain with the United States.

This paper studies how agents with conflicting interests learn to cooperate when the details of cooperation are not common knowledge. It considers a repeated game in which one player has incomplete information about when and how her partner can provide benefits. Initially, monitoring is imperfect and cooperation requires inefficient punishment. As the players' common history grows, the uninformed player can learn to monitor her partner's actions, which allows players to establish more efficient cooperative routines. Because revealing information is costly, it may be optimal not to reveal all the existing information, and efficient equilibria can be path-dependent. (JEL C73, D82, D83, D86) [ABSTRACT FROM AUTHOR]

This paper analyzes the welfare costs of business cycles when workers face uninsurable job displacement risk. The paper uses a simple macroeconomic model with incomplete markets to show that cyclical variations in the long-term earnings losses of displaced workers can generate arbitrarily large cost of business cycles even if the variance of individual income changes is constant over the cycle. In addition to the theoretical analysis, this paper conducts a quantitative study of the cost of business cycles using empirical evidence on the long-term earnings losses of US workers. The quantitative analysis shows that realistic variations in job displacement risk generate sizable costs of business cycles, even though a second-moment analysis would suggest negligible costs. (JEL E21, E24, E32, J63) [ABSTRACT FROM AUTHOR]

The article focuses on the expansion of the "New York Times" newspaper and how the entrance of national media affects local media markets. This study explains how researchers estimate the effect of outside media on local media consumption and coverage. Results indicate that technology can impact the link between local preferences and products, which also affects who benefits from market change. Research methods include the analysis of the newspaper's home delivery service and local newspaper sales, as well as mathematical analysis of market penetration.

This article explores the explanation provided by Farley W. Grubb on the rhetoric and behavior of the Founding Fathers regarding the monetary clauses put in the U.S. Constitution, which is consistent with the quantitative evidence on price indices, exchange rates, and the incidence of currencies used in market transactions both before and after the 1787 Constitutional Convention. Robert W. Michener and Robert E. Wright challenge this explanation. They assert that the burden of proof in this debate should fall on revisionists, among whom they rank Grubb. Michener and Wright's story leads to a revisionist interpretation of the Founding Fathers and the performance of the early U.S. dollar monetary system that is outside the scholarly mainstream.

We investigate the market for news under two assumptions: that readers hold beliefs which they like to see confirmed, and that newspapers can slant stories toward these beliefs. We show that, on the topics where readers share common beliefs, one should not expect accuracy even from competitive media: competition results in lower prices, but common slanting toward reader biases. On topics where reader beliefs diverge (such as politically divisive issues), however, newspapers segment the market and slant toward extreme positions. Yet in the aggregate, a reader with access to all news sources could get an unbiased perspective. Generally speaking, reader heterogeneity is more important for accuracy in media than competition per se. [ABSTRACT FROM AUTHOR]

The United States has experienced a drop in international student enrollment, between 6 and 10 percent, for three consecutive years since 2001. The overall decline in enrollment from China was 8 percent, while enrollment from India declined 4 percent (Council of Graduate Schools, 2004). This paper focuses on the changing immigration policy regime and the different dimensions in self-selectivity of graduate students' study-abroad decisions before and after 2001, and a U.S. visa regime change. In particular, I use two surveys in 1999 and 2004 to analyze the changing dimensions on student's ability before and after the U.S. visa policy change in 2001. By operationalizing a student's "ability" into three skill indexes, in-class ranking (rank), research project participation (project), research paper publications (publications), I show that students are likely to be negatively self-selected (lower-ability students wanted to study abroad more than others) in terms of ranking and projects in 1999. More importantly, the pattern of student ability selectivity changed after the immigration policy regime shifted; there is an increase in projects but a significant decrease in publications (at the one and two papers level). This suggests that skill-sorting may be due to a marginal return of specific endowment (ability) and the influence of place-specific human-capital development. This paper extends the literature by showing different dimensions of skill-sorting in selectivity when there is a (negative) policy shock. [ABSTRACT FROM AUTHOR]

The article presents several books related to population and migration. The book "The Urban Community," edited by E.W. Burgess, focuses on the American Sociological Society meeting that was held in 1925. The meeting centered upon the sociology of the city. It is supposed that as a text or book of readings this volume will have a place, but the book would have been better if it included matter other than Sociological Society papers. Some other books mentioned in the article are: "The Suicide Problem in the United States," by A.D. Frenay; "The Racial Characters of the Swedish Nation," edited by H. Lundborg and F.J. Linders; "Problems of Overpopulation," by M.H. Sanger; "The Natural Increase of Mankind," by J.S. Sweeney; "Negro Labor in the United States," by C.H. Wesley; "Migration Movements, 1920-1924," "Statistical Report on the External Migration of the Dominion of New Zealand for the Year 1926," "Statistik Des Deutschen Reiches: Die Bewegung Der Bevölkerung in Den Jahren 1922 Und Die Ursachen Der Sterbefälle in Den Jahren 1920-23."

This paper uses new confidential Census data to revisit the relationship between firm size, cyclicality, and financial frictions. First, we find that large firms (the top 1 percent by size) are less cyclically sensitive than the rest. Second, high and rising concentration implies that the higher cyclicality of the bottom 99 percent of firms only has a modest impact on aggregate fluctuations. Third, differences in cyclicality are not simply explained by financing, and in fact appear largely unrelated to proxies for financial strength. We instead provide evidence for an alternative mechanism based on the industry scope of the very largest firms. [ABSTRACT FROM AUTHOR]

Many price indices must be constructed without quantity data at the elementary level. The paper shows that for some consumer goods in the United States and other countries, one can approximate expenditure shares using weights derived from the retail distribution of sellers. These weights are based on the share of outlets selling an item, or the share of outlets adjusted by the total number of items sold in each. Relative to using no weights, the paper finds that using such imputed weights substantially reduces bias in the frequency of price changes, in annual inflation, and in price comparisons across countries. (JEL E31, L11, L81, O11, O14) [ABSTRACT FROM AUTHOR]

The article presents a report from the editor of the "American Economic Journal: Applied Economics," which was launched by the American Economic Association in 2007.

This paper studies the impact of the mortgage interest tax deduction on equilibrium house prices, rents, homeownership, and welfare. We build a dynamic model of the housing market that features a realistic progressive tax system in which owner-occupied housing services are tax-exempt and mortgage interest payments are tax-deductible. We simulate the effect of tax reform on the housing market. Eliminating the mortgage interest deduction causes house prices to decline, increases homeownership, decreases mortgage debt, and improves welfare. Our findings challenge the widely held view that repealing the preferential tax treatment of mortgages would depress homeownership. (JEL H24, H31, R21, R31) [ABSTRACT FROM AUTHOR]

We use unique data from journal submissions to identify and unpack publication bias and p-hacking. We find initial submissions display significant bunching, suggesting the distribution among published statistics cannot be fully attributed to a publication bias in peer review. Desk-rejected manuscripts display greater heaping than those sent for review; i.e., marginally significant results are more likely to be desk rejected. Reviewer recommendations, in contrast, are positively associated with statistical significance. Overall, the peer review process has little effect on the distribution of test statistics. Lastly, we track rejected papers and present evidence that the prevalence of publication biases is perhaps not as prominent as feared. (JEL A11, A14, C13, L82) [ABSTRACT FROM AUTHOR]

This paper examines the efficacy of second-best trade restrictions at correcting sectoral misallocation due to scale economies or profit-generating markups. To this end, we characterize optimal trade and industrial policies in an important class of quantitative trade models with scale effects and profits, estimating the structural parameters that govern policy outcomes. Our estimates reveal that standalone trade policy measures are remarkably ineffective at correcting mis-allocation, even when designed optimally. Unilateral adoption of corrective industrial policies is also ineffective due to immiserizing growth effects. But industrial policies coordinated internationally via a deep agreement are more transformative than any unilateral policy alternative. (JEL F12, F13,14. L52, O19, O25) [ABSTRACT FROM AUTHOR]

A main focus in economics is how to design optimal policies in second-best situations, which often requires a trade-off between giving some individuals more than they deserve, false positives, and others less than they deserve, false negatives. This paper provides novel evidence on people's second-best fairness preferences from large-scale experimental studies in the United States and Norway. The majority of people are more concerned with false negatives than with false positives, but we document substantial heterogeneity in second-best fairness preferences between the countries and across the political spectrum. The findings shed light on the political economy of social insurance and redistribution. (JEL D63, D72, D78, H23, I38) [ABSTRACT FROM AUTHOR]

This paper shows how to identify and estimate, using standard semi-parametric techniques, a class of dynamic games with perfect monitoring, that have been at the frontier of recent research in political economy. The empirical analysis provides novel quantitative insights into the trade-off that voters face between ideology and ability, the differences in ability and ideology among parties and states, and the differences in preferences between political candidates and voters. We analyze the consequences of term limits and quantify their relative importance. Specifically, we characterize conditions under which term limits improve voters' welfare. (JEL C57, C73, D72) [ABSTRACT FROM AUTHOR]

This article provides information on several developments in the American Economic Association's Committee on Economic Education (CEE) as of 2004. A major development for the year was the launch of a CEE-sponsored Teaching Innovations Program for faculty members in economics. It is funded by a $675,000 grant over five years from the National Science Foundation and is co-directed by William Walstad and Michael Salemi. CEE also offered workshops for economics instructors about active learning strategies for the undergraduate economics curriculum.

An introduction is presented which offers information on the journal "American Economic Review" including lists of the editorial staff and of those participating in peer review of submitted articles, figures on the number of articles submitted and published, and subject areas of published articles.

This paper documents the existence and characteristics of US firms that do not manufacture themselves, but nonetheless are heavily involved in the production of goods. These factoryless goods producing firms (FGPFs) are formally in the wholesale sector but, unlike traditional wholesale firms, FGPFs design the goods they sell and coordinate production activities. FGPFs in the wholesale sector are larger and younger, pay higher wages, span more sectors and had more manufacturing employment in previous years compared to traditional wholesalers. FGPFs are more likely to import than typical wholesalers, though their imports constitute a smaller share of their total domestic activity. [ABSTRACT FROM AUTHOR]

This paper uses a unique and rich administrative data set to analyze the impact of the introduction of a new grading policy on graduations rates at Benedict College, a Historically Black College in Columbia, South Carolina. According to the new grading policy, grades for underclassmen are determined in part by performance on tests and in part by measures of 'effort' such as attendance and class participation. This paper finds that while graduates graduate at a faster rate under the policy, there is no significant difference between graduation rates before and after the policy was implemented. [ABSTRACT FROM AUTHOR]

This paper proposes a flexible- price theory of the role of money in an economy with incomplete idiosyncratic risk sharing. When the risk premium goes up, money provides a safe store of value that prevents interest rates from falling, reducing investment. Investment is too high during booms when risk is low, and too low during slumps when risk is high. Monetary policy cannot correct this: money is superneutral and Ricardian equivalence holds. The optimal allocation requires the Friedman rule and a tax/subsidy on capital. The real effects of money survive even in the cashless limit. [ABSTRACT FROM AUTHOR]

Using a quantitative heterogeneous agents macro-housing model and detailed microdata, this paper studies the drivers of the 2006–2011 housing bust, its spillovers to consumption and the credit market, and the ability of mortgage rate interventions to accelerate the recovery. The model features tenure choice between owning and renting, rich portfolio choice, long-term defaultable mortgages, and endogenously illiquid housing from search frictions. The equilibrium analysis and empirical evidence suggest that the deterioration in house prices and liquidity, transmitted to consumption via balance sheets that vary in composition and depth, is central to explaining the observed aggregate and cross-sectional patterns. (JEL E23, E32, E44, G21, R31) [ABSTRACT FROM AUTHOR]

This paper examines the effects of the abandonment of China's Grand Canal—the world's largest and oldest artificial waterway—which served as a disruption to regional trade access. Using an original dataset covering 575 counties over 262 years, we show that the canal's abandonment contributed to the social turmoil that engulfed North China in the nineteenth century. Counties along the canal experienced an additional 117 percent increase in rebelliousness after the canal's closure relative to their non-canal counterparts. Our findings highlight the important role that continued access to trade routes plays in reducing conflict. (JEL D74, N75, N95, O18, O22, R12, R42) [ABSTRACT FROM AUTHOR]

This paper examines race and police use of force using data on 1.6 million 911 calls in two cities, neither of which allows for discretion in officer dispatch. Results indicate White officers increase force much more than minority officers when dispatched to more minority neighborhoods. Estimates indicate Black (Hispanic) civilians are 55 (75) percent more likely to experience any force, and five times as likely to experience a police shooting, compared to if White officers scaled up force similarly to minority officers. Additionally, 14 percent of White officers use excess force in Black neighborhoods relative to our statistical benchmark. (JEL H76, J15, K42, R23) [ABSTRACT FROM AUTHOR]

This paper investigates the trade-offs between local elites and state agents as tax collectors in low-capacity states. We study a randomized policy experiment assigning neighborhoods of a large Congolese city to property tax collection by city chiefs or state agents. Chief collection raised tax compliance by 3.2 percentage points, increasing revenue by 44 percent. Chiefs collected more bribes but did not undermine tax morale or trust in government. Results from a hybrid treatment arm in which state agents consulted with chiefs before collection suggest that chief collectors achieved higher compliance by using local information to more efficiently target households with high payment propensities, rather than by being more effective at persuading households to pay conditional on having visited them. (JEL D73, D83, H24, H26, H71, O12, O17) [ABSTRACT FROM AUTHOR]

This paper evaluates an intervention in India that engaged adolescent girls and boys in classroom discussions about gender equality for two years, aiming to reduce their support for societal norms that restrict women's and girls' opportunities. Using a randomized controlled trial, we find that the program made attitudes more supportive of gender equality by 0.18 standard deviations, or, equivalently, converted 16 percent of regressive attitudes. When we resurveyed study participants two years after the intervention had ended, the effects had persisted. The program also led to more gender-equal self-reported behavior, and we find weak evidence that it affected two revealed-preference measures. (JEL D63, D91, I21, J13, J16, 012) [ABSTRACT FROM AUTHOR]

This paper documents a large association between individuals' time discounting in incentivized experiments and their positions in the real-life wealth distribution derived from Danish high-quality administrative data for a large sample of middle-aged individuals. The association is stable over time, exists through the wealth distribution and remains large after controlling for education, income profile, school grades, initial wealth, parental wealth, credit constraints, demographics, risk preferences, and additional behavioral parameters. Our results suggest that savings behavior is a driver of the observed association between patience and wealth inequality as predicted by standard savings theory. (JEL C91, D15, D31, E21) [ABSTRACT FROM AUTHOR]

According to the Chamley-Judd result, capital should not be taxed in the long run. In this paper, we overturn this conclusion, showing that it does not follow from the very models used to derive it. For the main model in Judd (1985), we prove that the long-run tax on capital is positive and significant, whenever the intertemporal elasticity of substitution is below one. For higher elasticities, the tax converges to zero but may do so at a slow rate, after centuries of high tax rates. The main model in Chamley (1986) imposes an upper bound on capital taxes. We provide conditions under which these constraints bind forever, implying positive long-run taxes. When this is not the case, the long-run tax may be zero. However, if preferences are recursive and discounting is locally nonconstant (e.g., not additively separable over time), a zero long-run capital tax limit must be accompanied by zero private wealth (zero tax base) or by zero labor taxes (first-best). Finally, we explain why the equivalence of a positive capital tax with ever-increasing consumption taxes does not provide a firm rationale against capital taxation. (JEL H21, H25) [ABSTRACT FROM AUTHOR]

This paper describes a paradox of global thrift. Consider a world in which interest rates are low and monetary policy is constrained by the zero lower bound. Now imagine that governments implement prudential financial and fiscal policies to stabilize the economy. We show that these policies, while effective from the perspective of individual countries, might backfire if applied on a global scale. In fact, prudential policies generate a rise in the global supply of savings and a drop in global aggregate demand. Weaker global aggregate demand depresses output in countries at the zero lower bound. Due to this effect, noncooperative financial and fiscal policies might lead to a fall in global output and welfare. (JEL E21, E23, E43, E44, E52, E62, F32) [ABSTRACT FROM AUTHOR]

Using confidential establishment-level data from the US Census Bureau's Longitudinal Business Database, this paper documents how local shocks propagate across US regions through firms' internal networks of establishments. Consistent with a model of optimal within-firm resource allocation, we find that establishment-level employment is sensitive to shocks in distant regions in which the establishment's parent firm is operating, and that the elasticity with respect to such shocks increases with the firm's financial constraint. At the aggregate regional level, we find that aggregate county-level employment is sensitive to shocks in distant counties linked through firms' internal networks. (JEL D22, G32, L14, L22, R23, R32) [ABSTRACT FROM AUTHOR]

This paper provides a comprehensive assessment of the margins along which firms responded to a large and persistent minimum wage increase in Hungary. We show that employment elasticities are negative but small even four years after the reform; that around 75 percent of the minimum wage increase was paid by consumers and 25 percent by firm owners; that firms responded to the minimum wage by substituting labor with capital; and that disemployment effects were greater in industries where passing the wage costs to consumers is more difficult. We estimate a model with monopolistic competition to explain these findings. [ABSTRACT FROM AUTHOR]