Accepted Papers

The Review of Economic Studies is one of the most highly respected academic journals in the field of economics. It is known for publishing leading research in all areas of economics, from microeconomics to macroeconomics. The journal is published by the Oxford University Press.

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A Theory of Cash Flow-Based Financing with Distress Resolution

Barney Hartman-Glaser, Simon Mayer, and Konstantin Milbradt

We develop a dynamic contracting theory of asset- and cash flow-based financing that demonstrates how firm, intermediary, and capital market characteristics jointly shape firms’ financing constraints. A firm with imperfect access to equity financing covers financing needs through costly sources: an intermediary and retained cash. The firm’s financing capacity is endogenously determined by either the liquidation value of assets (asset-based) or the intermediary’s going-concern valuation of the firm’s cash flows (cash flow-based).

Wealth Inequality and Asset Prices

Matthieu Gomez

Wealthy households disproportionately invest in equity, causing equity returns to generate large and persistent fluctuations in top wealth inequality. Motivated by this observation, I study the joint dynamics of asset prices and wealth inequality in a model where a subset of agents (“entrepreneurs”) hold levered positions on the economy. In the model, as in the data, the wealth distribution is stochastic and it exhibits a Pareto tail, with a tail index that depends on the logarithmic average return of top households.

Melons as Lemons: Asymmetric Information, Consumer Learning and Seller Reputation

Jie Bai

Quality provision is often low in many developing markets, and firms commonly lack a reputation for quality. This paper examines this issue both theoretically and empirically in the context of retail watermelon markets in China. I first demonstrate the existence of significant asymmetric information on quality between sellers and buyers, as well as the absence of a quality premium at baseline. To explain this, I develop a theoretical model that highlights the role of consumer beliefs and costly signaling in influencing sellers’ reputation incentives.

Job Displacement, Unemployment Benefits and Domestic Violence

Sonia Bhalotra, Diogo Britto, Paolo Pinotti, and Breno Sampaio

We estimate impacts of male job loss, female job loss, and male unemployment benefits on domestic violence (DV) in Brazil. We merge individual-level employment and welfare registers with different measures of domestic violence: judicial cases brought to criminal courts, the use of public shelters by victims, and mandatory DV notifications by health providers. Leveraging mass layoffs for identification, we first show that both male and female job loss, independently, lead to large and pervasive increases in DV.

Voting on a Trade Agreement: Firm Networks and Attitudes Toward Openness

Esteban Méndez and Diana Van Patten

We exploit a unique event to study the extent to which popular attitudes toward trade are driven by economic fundamentals. In 2007, Costa Rica put a free trade agreement (FTA) to a national referendum. With a single question on the ballot, 59% of Costa Rican adult citizens cast a vote on whether they wanted an FTA with the United States to be ratified or not. We merge disaggregated referendum results, which break new ground on anonymity-compatible voting data, with employer-employee, customs, and firm-to-firm transactions data, and data on household composition and expenditures.

Inference with a single treated cluster

Andreas Hagemann

I introduce a generic method for inference about a scalar parameter in research designs with a finite number of heterogeneous clusters where only a single cluster received treatment. This situation is commonplace in difference-in-differences estimation but the test developed here applies more broadly. I show that the test controls size and has power under asymptotics where the number of observations within each cluster is large but the number of clusters is fixed. The test combines weighted, approximately Gaussian parameter estimates with a rearrangement procedure to obtain its critical values.

Valuing the Time of the Self-Employed

Daniel Agness, Travis Baseler, Sylvain Chassang, Pascaline Dupas, and Erik Snowberg

People’s value of their own time is a key input in public policy evaluations – these evaluations should account for time taken away from work or leisure as a result of policy. Measuring this value for the self-employed is challenging, as, by definition, it
is not priced by the market. Using rich choice data collected from farming households in western Kenya, we show that households exhibit non-transitive preferences. As a result, neither market wages nor standard valuation techniques correctly measure participants’ value of time.

Finite Sample Inference for the Maximum Score Estimand

Adam M. Rosen and Takuya Ura

We provide a finite sample inference method for the structural parameters of the semiparametric binary response model under a conditional median restriction originally studied by Manski (1975, 1985). This is achieved by exploiting distributional properties of observable outcomes conditional on the observed sequence of exogenous variables. Moment inequalities conditional on the size n sequence of exogenous covariates are constructed, and the proposed test statistic is a monotone function of violations of the corresponding sample moment inequalities.

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We are pleased to introduce Niels Gormsen (@NielsGormsen), Copenhagen Business School & University of Chicago, as a new member of the Editorial Board of REStud. His outstanding expertise will help us continue to publish pioneering economic research.
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Welcome aboard! Jose Vasquez (@jpvasq), London School of Economics, has joined the Editorial Board of The Review of Economic Studies. We are grateful to have his expertise supporting our mission.
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We are thrilled to announce that Ro’ee Levy (@RoeeLevyZ), Tel Aviv University School of Economics, is joining the Editorial Board of The Review of Economic Studies. We look forward to his valuable contributions to the journal’s future.
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Exciting news: Dávid Nagy, CREI, has joined the Editorial Board of The Review of Economic Studies. His deep knowledge will help guide the journal’s editorial process.
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