American Economic Review
Vol. 95, No. 1, March 2005
Contents
NOTE: If you have difficulty accessing the articles,
this may be because viewing articles now requires Adobe Acrobat Reader
Version 5.0 or higher. Please download
the latest version of Acrobat Reader if necessary.
Articles
Rethinking Social Insurance
Martin Feldstein
Abstract | Full-text
for AEA members | Other
online viewing options
The Cyclical Behavior of Equilibrium Unemployment and Vacancies
Robert Shimer
Abstract | Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Employment Fluctuations with Equilibrium Wage Stickiness
Robert E. Hall
Abstract | Full-text
for AEA members | Other
online viewing options
Financial Reform: What Shakes It? What Shapes It?
Abdul Abiad and Ashoka Mody
Abstract | Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Optimal Monetary Policy with Relative Price Distortions
Tack Yun
Abstract | Full-text
for AEA members | Other
online viewing options
Link to Data Set
[.zip]
The Case for Open-Market Purchases in a Liquidity Trap
Alan J. Auerbach and Maurice Obstfeld
Abstract | Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Bond Risk Premia
John H. Cochrane and Monika Piazzesi
Abstract | Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip] | Link
to Appendix [.pdf]
Estimation and Inference of Impulse Responses by Local Projections
Òscar Jordà
Abstract | Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
The Baby Boom and Baby Bust
Jeremy Greenwood, Ananth Seshadri, and Guillaume Vandenbroucke
Abstract | Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
An Empirical Assessment of the Comparative Advantage Gains from Trade:
Evidence from Japan
Daniel M. Bernhofen and John C. Brown
Abstract | Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
Wealth as a Determinant of Comparative Advantage
José Wynne
Abstract | Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Extracting Inflation from Stock Returns to Test Purchasing Power Parity
Bhagwan Chowdry, Richard Roll, and Yihong Xia
Abstract | Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
The Quantity and Quality of Life and the Evolution of World Inequality
Gary S. Becker, Tomas J. Philipson, and Rodrigo R. Soares
Abstract | Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Distance, Time, and Specialization: Lean Retailing in General Equilibrium
Carolyn L. Evans and James Harrigan
Abstract | Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip] | Link
to Appendix [.pdf]
How to Protect Future Generations Using Tax-Base Restrictions
Antonio Rangel
Abstract | Full-text
for AEA members | Other
online viewing options
A Political Economy Model of Congressional Careers
Daniel Diermeier, Michael Keane, and Antonio Merlo
Abstract | Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
Shorter Papers
In Search of the Holy Grail: Policy Convergence, Experimentation, and
Economic Performance
Sharun W. Mukand and Dani Rodrik
Full-text
for AEA members | Other
online viewing options
Link to Appendix
[.pdf]
Deception: The Role of Consequences
Uri Gneezy
Full-text
for AEA members | Other
online viewing options
Will U.S. Agriculture Really Benefit from Global Warming? Accounting
for Irrigation in the Hedonic Approach
Wolfram Schlenker, W. Michael Hanemann, and Anthony C. Fisher
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Are Delays in Academic Publishing Necessary?
Derek Leslie
Full-text
for AEA members | Other
online viewing options
Link to Additional
Materials [.zip]
Educational Reform, Ability and Family Background
Costas Meghir and Mårten Palme
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
The Sensitivity of Long-Term Interest Rates to Economic News: Evidence
and Implications for Macroeconomic Models
Refet S. Gürkaynak, Brian Sack, and Eric Swanson
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
Why the Apple Doesn't Fall Far: Understanding Intergenerational Transmission
of Human Capital
Sandra E. Black, Paul J. Devereuz, and Kjell G. Salvanes
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
Patent Citations and the Geography of Knowledge Spillovers: A Reassessment
Peter Thompson and Melanie Fox-Kean
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
Patent Citations and the Geography of Knowledge Spillovers: A Reassessment:
Comment
Rebecca Henderson, Adam Jaffe, and Manuel Trajtenberg
Full-text
for AEA members | Other
online viewing options
Patent Citations and the Geography of Knowledge Spillovers: A Reassessment:
Reply
Peter Thompson and Melanie Fox-Kean
Full-text
for AEA members | Other
online viewing options
Demand Reduction in Multi-Unit Auctions: Evidence from a Sportscard Field
Experiment: Comment
Dan Levin
Full-text
for AEA members | Other
online viewing options
Demand Reduction in Multi-Unit Auctions: Evidence from a Sportscard Field
Experiment: Reply
Richard Engelbrecht-Wiggans, John A. List, and David H. Reiley
Full-text
for AEA members | Other
online viewing options
NOTE: If you have difficulty accessing the articles,
this may be because viewing articles now requires Adobe Acrobat Reader
Version 5.0 or higher. Please download
the latest version of Acrobat Reader if necessary.
Abstracts
Rethinking Social Insurance
Martin Feldstein
No abstract available.
Full-text
for AEA members | Other
online viewing options
The Cyclical Behavior of Equilibrium Unemployment and Vacancies
Robert Shimer
This paper argues that the textbook search and matching model cannot
generate the observed business-cycle-frequency fluctuations in unemployment
and job vacancies in response to shocks of a plausible magnitude. In the
United States, the standard deviation of the vacancy-unemployment ratio
is almost 20 times as large as the standard deviation of average labor
productivity, while the search model predicts that the two variables should
have nearly the same volatility. A shock that changes average labor productivity
primarily alters the present value of wages, generating only a small movement
along a downward-sloping Beveridge curve (unemploymentvacancy locus).
A shock to the separation rate generates a counterfactually positive correlation
between unemployment and vacancies. In both cases, the model exhibits
virtually no propagation. (JEL E24, E32, J41, J63, J64)
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Employment Fluctuations with Equilibrium Wage Stickiness
Robert E. Hall
Abstract: Following a recession, the aggregate labor market is slack–employment
remains below normal and recruiting efforts of employers, as measured
by help-wanted advertising and vacancies, are low. A model of matching
friction explains the qualitative responses of the labor market to adverse
shocks, but requires implausibly large shocks to account for the magnitude
of observed fluctuations. The incorporation of wage stickiness vastly
increases the sensitivity of the model to driving forces. I develop a
new model of the way that wage stickiness affects unemployment. The stickiness
arises in an economic equilibrium and satisfies the condition that no
worker-employer pair has an unexploited opportunity for mutual improvement.
Sticky wages neither interfere with the efficient formation of employment
matches nor cause inefficient job loss. Thus the model provides an answer
to the fundamental criticism previously directed at sticky-wage models
of fluctuations. (JEL E24, E32, J64)
Full-text
for AEA members | Other
online viewing options
Financial Reform: What Shakes It? What Shapes It?
Abdul Abiad and Ashoka Mody
Abstract: What accounts for the worldwide advance of financial reforms
in the last quarter century? Using a new index of financial liberalization,
we find that influential events shook the policy status quo. Balance-of-payments
crises spurred reforms, but banking crises set liberalization back. Falling
global interest rates strengthened reformers, while new governments went
both ways. The overall trend toward liberalization, however, reflected
pressures and incentives generated by initial reforms that raised the
likelihood of additional reforms, stimulated further by the need to catch
up with regional reform leaders. In contrast, ideology and country structure
had limited influence. (JEL P11, P16, P34, N20, G28)
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Optimal Monetary Policy with Relative Price Distortions
Tack Yun
Abstract: This paper analyzes optimal monetary policy in a sticky price
model with Calvo-type staggered price-setting. In the paper, the optimal
monetary policy maximizes the expected utility of a representative household
without having to rely on a set of linearly approximated equilibrium conditions,
given the distortions associated with the staggered price-setting. It
shows that the complete stabilization of the price level is optimal in
the absence of initial price dispersion, while optimal inflation targets
respond to changes in the level of relative price distortion in the presence
of initial price dispersion. (JEL E31, E32, E52)
Full-text
for AEA members | Other
online viewing options
Link to Data Set
[.zip]
The Case for Open-Market Purchases in a Liquidity Trap
Alan J. Auerbach and Maurice Obstfeld
Abstract: Prevalent thinking about liquidity traps suggests that the
perfect substitutability of money and bonds at a zero short-term nominal
interest rate renders open-market operations ineffective for achieving
macroeconomic stabilization goals. We show that even were this the case,
there remains a powerful argument for large-scale open market operations
as a fiscal policy tool. As we also demonstrate, however, this same reasoning
implies that open market operations will be beneficial for stabilization
as well, even when the economy is expected to remain mired in a liquidity
trap for some time. Thus, the microeconomic fiscal benefits of open market
operations in a liquidity trap go hand in hand with standard macroeconomic
objectives. Motivated by Japan’s recent economic experience, we
use a dynamic general-equilibrium model to assess the welfare impact of
open-market operations for an economy in Japan’s predicament. We
argue Japan can achieve a substantial welfare improvement through large
open-market purchases of domestic government debt. (JEL E43, E52, E63)
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Bond Risk Premia
John H. Cochrane and Monika Piazzesi
Abstract: We study time variation in expected excess bond returns. We
run regressions of one-year excess returns on initial forward rates. We
find that a single factor, a single tent-shaped linear combination of
forward rates, predicts excess returns on one- to five-year maturity bonds
with R2 up to 0.44. The return forecasting factor is countercyclical and
forecasts stock returns. An important component of the returnforecasting
factor is unrelated to the level, slope, and curvature movements described
by most term structure models. We document that measurement errors do
not affect our central results. (JEL G0, G1, E0, E4)
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip] | Link
to Appendix [.pdf]
Estimation and Inference of Impulse Responses by Local Projections
Òscar Jordà
Abstract: This paper introduces methods to compute impulse responses
without specification and estimation of the underlying multivariate dynamic
system. The central idea consists in estimating local projections at each
period of interest rather than extrapolating into increasingly distant
horizons from a given model, as it is done with vector autoregressions
(VAR). The advantages of local projections are numerous: (1) they can
be estimated by simple regression techniques with standard regression
packages; (2) they are more robust to misspecification; (3) joint or point
wise analytic inference is simple; and (4) they easily accommodate experimentation
with highly nonlinear and flexible specifications that may be impractical
in a multivariate context. Therefore, these methods are a natural alternative
to estimating impulse responses from VARs. Monte Carlo evidence and an
application to a simple, closed-economy, new-Keynesian model clarify these
numerous advantages. (JEL C32, E47, C53)
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
The Baby Boom and Baby Bust
Jeremy Greenwood, Ananth Seshadri, and Guillaume Vandenbroucke
Abstract: What caused the baby boom? And can it be explained within the
context of the secular decline in fertility that has occurred over the
last 200 years? The hypothesis is that: (a) The secular decline in fertility
is due to the relentless rise in real wages that increased the opportunity
cost of having children; (b) The baby boom is explained by an atypical
burst of technological progress in the household sector that occurred
in the middle of the last century. This lowered the cost of having children.
A model is developed in an attempt to account, quantitatively, for both
the baby boom and bust. (JEL E1, J1, 03)
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
An Empirical Assessment of the Comparative Advantage Gains from Trade:
Evidence from Japan
Daniel M. Bernhofen and John C. Brown
Abstract: We provide an empirical assessment of the comparative advantage
gains from trade argument. We use Japan’s nineteenth century opening
up to world commerce as a natural experiment to answer the following counterfactual:
“By how much would real income have had to increase in Japan during
its final autarky years of 1851–1853 to afford the consumption bundle
the economy could have obtained if it were engaged in international trade
during that period?” Using detailed historical data on trade flows,
autarky prices, and Japan’s real GDP, we obtain upper bounds on
the gains from trade of about 8 to 9 percent of Japan’s GDP. (JEL
F11, F14, N10, N75)
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
Wealth as a Determinant of Comparative Advantage
José Wynne
Abstract: This paper shows that a country’s wealth can be an important
determinant of comparative advantage when access to credit differs across
sectors of the economy. Wealthier nations exhibit a comparative advantage
toward goods produced in sectors facing more severe financial imperfections.
These sectors are typically populated by small firms. Empirically this
paper documents that these sectors are also labor intensive. Consequently,
this theory partially offsets traditional sources of comparative advantage
and offers an explanation for Trefler’s missing trade mystery and
the Leontief paradox. Furthermore, the theory makes the relation between
trade and income distribution endogenous. (JEL F11, F14, F41, F43)
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Extracting Inflation from Stock Returns to Test Purchasing Power Parity
Bhagwan Chowdry, Richard Roll, and Yihong Xia
Abstract: Relative purchasing power parity (PPP) holds for pure price
inflations, which affect prices of all goods and services by the same
proportion, while leaving relative prices unchanged. Pure price inflations
also affect nominal returns of all traded financial assets by exactly
the same amount. Recognizing that relative PPP may not hold for the official
inflation data constructed from commodity price indices because of relative
price changes and other frictions that cause prices to be “sticky,”
we provide a novel method for extracting a proxy for realized pure price
inflation from stock returns. We find strong support for relative PPP
in the short run using the extracted inflation measures. (JEL F31, G15)
Full-text
for AEA members | Other
online viewing options
The Quantity and Quality of Life and the Evolution of World Inequality
Gary S. Becker, Tomas J. Philipson, and Rodrigo R. Soares
Abstract: GDP per capita is usually used to proxy for the quality of
life of individuals living in different countries. Welfare is also affected
by quantity of life, however, as represented by longevity. This paper
incorporates longevity into an overall assessment of the evolution of
cross-country inequality and shows that it is quantitatively important.
The absence of reduction in cross-country inequality up to the 1990s documented
in previous work is in stark contrast to the reduction in inequality after
incorporating gains in longevity. Throughout the post–World War
II period, health contributed to reduce significantly welfare inequality
across countries. This paper derives valuation formulas for infra-marginal
changes in longevity and computes a “full” growth rate that
incorporates the gains in health experienced by 96 countries for the period
between 1960 and 2000. Incorporating longevity gains changes traditional
results; countries starting with lower income tended to grow faster than
countries starting with higher income. We estimate an average yearly growth
in “full income” of 4.1 percent for the poorest 50 percent
of countries in 1960, of which 1.7 percentage points are due to health,
as opposed to a growth of 2.6 percent for the richest 50 percent of countries,
of which only 0.4 percentage points are due to health. Additionally, we
decompose changes in life expectancy into changes attributable to 13 broad
groups of causes of death and three age groups. We show that mortality
from infectious, respiratory, and digestive diseases, congenital, perinatal,
and “ill-defined” conditions, mostly concentrated before age
20 and between ages 20 and 50, is responsible for most of the reduction
in life expectancy inequality. At the same time, the recent effect of
AIDS, together with reductions in mortality after age 50—due to
nervous system, senses organs, heart and circulatory diseases—contributed
to increase health inequality across countries. (JEL I10, I31, J17, O57)
Full-text
for AEA members | Other
online viewing options
Link
to Data Set [.zip]
Distance, Time, and Specialization: Lean Retailing in General Equilibrium
Carolyn L. Evans and James Harrigan
Abstract: Transport time increases with distance traveled, and time is
valuable. We show the implications of these facts for global specialization
and trade: products where timely delivery is important will be produced
near the source of final demand, where wages will be higher as a result.
In the model, timely delivery is important because it allows retailers
to respond to final demand fluctuations without holding costly inventories,
and timely delivery is possible only from nearby locations. Using a unique
dataset that allows us to measure the retail demand for timely delivery,
we show that the sources of U.S. apparel imports have shifted in the way
predicted by the model, with products for which timeliness matters increasingly
imported from nearby countries. (JEL F1)
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip] | Link
to Appendix [.pdf]
How to Protect Future Generations Using Tax-Base Restrictions
Antonio Rangel
Abstract: This paper studies how to protect future generations from expropriation
and to induce optimal investment in intergenerational public goods (IPGs),
by introducing constitutional restrictions on the tax base. The type of
tax-base restrictions that we consider places limits on the tax instruments
that the government can use to raise revenue, but not on the level of
expenditures or debt. We show that the introduction of a constitutional
amendment requiring that IPGs and debt be financed with land taxes makes
intergenerational expropriation impossible and, for many cases of interest,
induces optimal investment in IPGs. We also show that a weaker constitutional
amendment requiring that IPGs be financed with land taxes, but imposing
no restrictions on how to finance the debt, has a positive impact on IPGs,
but not on expropriation. The paper also studies the political feasibility
of these reforms. We show that the first reform is not politically feasible
since it hurts current generations, but the weaker reform can induce a
Pareto improvement. (JEL D1, D7, H0, H3, H4, H5, H6)
Full-text
for AEA members | Other
online viewing options
A Political Economy Model of Congressional Careers
Daniel Diermeier, Michael Keane, and Antonio Merlo
Abstract: Our main goal is to quantify the returns to a career in the
United States Congress. We specify a dynamic model of career decisions
of a member of Congress and estimate this model using a newly collected
dataset. Given estimates of the structural model, we assess reelection
probabilities, estimate the effect of congressional experience on private
and public sector wages, and quantify the value of a congressional seat.
Moreover, we assess how an increase in the congressional wage or the imposition
of term limits would affect the career decisions of politicians and the
returns from a career in Congress. (JEL D72, J44, J45)
Full-text
for AEA members | Other
online viewing options
Link to Data
Set [.zip]
NOTE: If you have difficulty accessing the articles,
this may be because viewing articles now requires Adobe Acrobat Reader
Version 5.0 or higher. Please download
the latest version of Acrobat Reader if necessary.
 Back
to Top
Copyright © 2005 American Economic Association; all rights
reserved. |
