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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Search Complementarities, Aggregate Fluctuations, and Fiscal Policy

Jesus Fernandez-Villaverde, Federico Mandelman, Yang Yu, and Francesco Zanetti

We document five novel facts about the role of search effort in forming trading relationships among firms by combining a variety of micro and macro datasets. These facts strongly suggest the presence of search complementarities. To study the implications of these facts for aggregate fluctuations, we build a dynamic general equilibrium model, disciplined by our new firm-level evidence on search effort. The model matches key aspects of the macro and micro data that have remained unaccounted for by standard models, including the time-varying bimodal distribution of output and the strong, nonlinear propagation of shocks.

Consumption Quality and Employment Across the Wealth Distribution

Domenico Ferraro and Vytautas Valaitis

In the United States, market hours worked are approximately flat across the wealth distribution. Accounting for this phenomenon is a standing challenge for standard heterogeneous-agent macro models. In these models, wealthier households consume more and work fewer hours. We propose a theory that generates the cross-sectional wealth-hours relation as in the data. We quantify this theory in a heterogeneous-agent incomplete-markets model with three key features: a quality choice in consumption, non-homothetic preferences, and a multi-sector production structure.

The Impact of Online Competition on Local Newspapers: Evidence from the Introduction of Craigslist

Milena Djourelova, Ruben Durante, and Gregory J. Martin

How does competition from online platforms affect the organization, performance, and editorial choices of newspapers? What are the implications of these changes for the information voters are exposed to and for their political choices? We study these questions using the staggered introduction of Craigslist—the world’s largest online platform for classified advertising — across US counties between 1995 and 2009. This setting allows us to separate the effect of competition for classified advertising from other changes brought about by the Internet, and to compare newspapers that relied more or less heavily on classified ads ex ante.

Efficient and Convergent Sequential Pseudo-Likelihood Estimation of Dynamic Discrete Games

Adam Dearing and Jason R. Blevins

We propose a new sequential Efficient Pseudo-Likelihood (k-EPL) estimator for dynamic discrete choice games of incomplete information. k-EPL considers the joint behavior of multiple players simultaneously, as opposed to individual responses to other agents’ equilibrium play. This, in addition to reframing the problem from conditional choice probability (CCP) space to value function space, yields a computationally tractable, stable, and efficient estimator. We show that each iteration in the k-EPL sequence is consistent and asymptotically efficient, so the first-order asymptotic properties do not vary across iterations.

(Successful) Democracies Breed Their Own Support

Daron Acemoglu, Nicolás Ajzenman, Cevat Giray Aksoy, Martin Fiszbein, and Carlos Molina

Using large-scale survey data covering more than 110 countries and exploiting within-country variation across cohorts and surveys, we show that individuals with longer exposure to democracy display stronger support for democratic institutions, and that this effect is almost entirely driven by exposure to democracies with successful performance in terms of economic growth, control of corruption, peace and political stability, and public goods provision.

A Theory of Socially Responsible Investment

Martin Oehmke and Marcus M. Opp

We characterize the conditions under which a socially responsible (SR) fund induces firms to reduce externalities, even when profit-seeking capital is in perfectly elastic supply. Such impact requires that the SR fund’s mandate permits the fund to trade off financial performance against reductions in social costs — relative to the counterfactual in which the fund does not invest in a given firm. Based on such an impact mandate, we derive the social profitability index (SPI), an investment criterion that characterizes the optimal ranking of impact investments when SR capital is scarce.

Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth

Ufuk Akcigit, Jeremy Pearce, and Marta Prato

How do innovation and education policy affect individual career choices and aggregate productivity? This paper analyzes the effect of R&D subsidies and higher education policy on productivity growth through the supply of innovative talent. We put scarce talent, higher education attainment, and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, financial resources, and preferences. We link the model to micro-level data from Denmark on the backgrounds of who obtains a PhD and becomes an inventor and the outcomes of a set of policy interventions.

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How should regulators target their limit enforcement budgets? We quantify the benefits of linked regulation, where regulators dynamically target plants co-owned with other plants with poor compliance records.

New paper by @leistenecon & Vreugdenhil

https://www.restud.com/dynamic-regulation-with-firm-linkages-evidence-from-texas/

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How do currencies become international?

Bahaj & Reis(@R2Rsquared) show that PBoC swap lines boosted RMB use abroad, revealing a policy lever to jumpstart a currency’s international status.

https://www.restud.com/jumpstarting-an-international-currency/

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Editorial update:
Gabriel Chodorow-Reich @gchodorowreich (Harvard University) has stepped down as a Foreign Editor of The Review of Economic Studies. We are grateful to Gabe for his excellent service and contributions to the journal and the REStud Tour.

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"Capital flowed to high-inflation countries during recent surge, worsening the output-inflation tradeoff. Reversing flows would have reduced volatility & tightening needs."

New paper by @LouphouC & Bengui:

https://www.restud.com/destabilizing-capital-flows-amid-global-inflation/

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