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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Optimal Pricing of a New Utility Service: The Case of Piped Water in Vietnam

Quy-Toan Do and Hanan G. Jacoby

As utility services expand throughout the developing world, providers must grapple with how to set prices to recover average costs. Data from a multi-year randomized pricing experiment among nearly 1500 recently-connected piped water customers in Vietnam reveal month-to-month demand persistence. Based on structural demand estimation, we document how endogenous preferences, if unaccounted for, can lead to low take-up and thereby threaten the financial viability of the new water utility.

Excess Capacity and Demand Driven Business Cycles

Tiancheng Sun

I build a macroeconomic model that features chronic excess capacity. Firms can use capacity to compete for buyers who are not fully attentive to prices. If one firm expands capacity while other firms do not, it “steals” or attracts profitable demand from others. Theoretically, I show that this capacity competition can cause an over-accumulation of capacity. In the presence of chronic excess capacity, capital resources can be slack, and demand shocks can have large effects on output.

A Structural Analysis of Mental Health and Labor Market Trajectories

Gregory Jolivet and Fabien Postel-Vinay

We analyze the joint life-cycle dynamics of labor market and mental health outcomes while allowing for two-way interactions between work and mental health. We model selection into jobs on a labor market with search frictions, accounting for the level of exposure to stress in each job using data on occupational health contents. Taking our model to British data from Understanding Society combined with information from O*NET, we estimate the impact of job characteristics on health dynamics and the effects of health and job stress contents on career choices.

Feedback and Learning: The Causal Effects of Reversals on Judicial Decision-Making

Manudeep Bhuller and Henrik Sigstad

Do judges respond to reversals of their decisions? Using random assignment of cases across two stages of the criminal justice system in Norway and a novel dataset linking trial court decisions to reversals in appeals courts, we provide causal evidence on feedback effects in judicial decision-making. By exploiting differences in the tendencies of randomly assigned appeal panels to reverse trial court decisions, we show that trial court judges who receive a reversal of a sentence respond by updating the likelihood of imposing a prison sentence in the direction of the reversal in future cases.

Imagining the Future: Memory, Simulation, and Beliefs

Pedro Bordalo, Giovanni Burro, Katherine Cofmann, Nicola Gennaioli, and Andrei Shleifer

How do people form beliefs about novel risks, with which they have little or no experience? Motivated by survey data on beliefs about Covid we collected in 2020, we build a model based on the psychology of selective memory. When a person thinks about an event, different experiences compete for retrieval, and retrieved experiences are used to simulate the event based on how similar they are to it. The model predicts that different experiences interfere with each other in recall and that non domain-specific experiences can bias beliefs based on their similarity to the assessed event.

Convicting Corrupt Officials: Evidence from Randomly Assigned Cases

Sebastian Axbard

Can the judiciary help root out government corruption? This paper exploits the random assignment of court cases to justices who exhibit varying degrees of strictness to examine how convicting corrupt officials affects local government outcomes in the Philippines. I document that convictions improve the management of local public finances and reduce associated corruption. An exploration of mechanisms suggests that legal deterrence effects contribute to these findings.

Stock Market Participation, Inequality, and Monetary Policy

Davide Melcangi and Vincent Sterk

Recent literature has shown that the fraction of liquidity-constrained households in the population critically determines the mix of transmission channels of monetary policy. In this paper, we bring a different but important dimension of heterogeneity to the forefront: stock market participation. We show that the stock market participation rate not only shapes the mix of policy channels, but also heavily affects the aggregate responses.

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A new paper by @THEdanjlewis & Mertens makes the Stock-Yogo test for weak instruments with multiple HAC robust endogenous regressors, propose tests for bias in a single coefficients, and extend to test general rank deficiency in the first stage

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New paper by @pilossopher, @davide_melc & Lewis estimates the distribution of spending responses to stimulus payments. MPCs are heterogeneous, with observables explaining 8% of the variation, highlighting the crucial role of latent heterogeneity

https://www.restud.com/latent-heterogeneity-in-the-marginal-propensity-to-consume/
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New paper, "Firm Quality Dynamics and the Slippery Slope of Credit Intervention" by @wenhaoli111 & Li shows that direct government and central bank lending can distort firm quality and fuel future interventions.

https://www.restud.com/firm-quality-dynamics-and-the-slippery-slope-of-credit-intervention/

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"We show how opportunity costs, a core economic concept, can explain seemingly non-rational behaviour (like cyclical choices) within a preference-maximising framework."

New paper by @PaolaManzini, @MarcoMa75263273 & @ulkulev

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https://www.restud.com/choice-and-opportunity-costs/

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