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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Algorithmic Recommendations and Human Discretion

Victoria Angelova, Will Dobbie, and Crystal S. Yang

Human decision-makers frequently override the recommendations generated by predictive algorithms, but it is unclear whether these discretionary overrides add valuable private information or reintroduce human biases and mistakes. We develop new quasi-experimental tools to measure the impact of human discretion over an algorithm on the accuracy of decisions, even when the outcome of interest is only selectively observed, in the context of bail decisions.

New

Supply Chain Disruption and Reorganization: Theory and Evidence From Ukraine’s War

Vasily Korovkin, Alexey Makarin, and Yuhei Miyauchi

How do localized conflicts disrupt supply chains and prompt firms to reorganize them? How do these forces affect firm-level and aggregate economic activity? Using firm-to-firm Ukrainian railway-shipment data before and during the 2014 Russia-Ukraine conflict, we document that firms with prior supplier and buyer exposure to the conflict areas substantially decreased their output. Simultaneously, firms reorganized their production linkages away from partners directly or indirectly exposed to the conflict shock.

New

Temporal-Difference Estimation of Dynamic Discrete Choice Models

Karun Adusumilli and Dita Eckardt

We study the use of Temporal-Difference learning for estimating the structural parameters in dynamic discrete choice models. Our algorithms are based on the conditional choice probability approach but use functional approximations to estimate various terms in the pseudo-log-likelihood function. We suggest two approaches: The first—linear semi-gradient—provides approximations to the recursive terms using basis functions. The second—Approximate Value Iteration—builds a sequence of approximations to the recursive terms by solving non-parametric estimation problems.

New

Normalizations and misspecification in skill formation models

Joachim Freyberger

An important class of structural models studies the determinants of skill formation and the optimal timing of interventions. In this paper, I provide new identification results for these models and investigate the effects of seemingly innocuous scale and location restrictions on parameters of interest. To do so, I first characterize the identified set of all parameters without these additional restrictions and show that important policy-relevant parameters are point identified under weaker assumptions than commonly used in the literature. The implications of imposing standard scale and location restrictions depend on how the model is specified, but they generally impact the interpretation of parameters and may affect counterfactuals.

New

Contract Terms, Employment Shocks, and Default in Credit Cards

Sara G. Castellanos, Diego Jiménez-Hernández, Aprajit Mahajan, Eduardo Alcaraz Prous, and Enrique Seira

Regulatory concerns over a tension between expanding financial access and limiting default have led to significant restrictions on contract terms in a number of countries, despite limited evidence on their effectiveness. We use a large nation-wide RCT to examine new borrower responses to changes in interest rates and minimum payments for a credit card that accounted for 15% of all first-time formal loans in Mexico. Default rates were 19% over the 26 month experiment and a 30 pp decrease in interest rates decreased default by 2.5 pp with no effects on the newest borrowers.

New

On the optimal design of a Financial Stability Fund

Árpád Ábraham, Eva Carceles-Poveda, Yan Liu, and Ramon Marimon

We develop a model of a Financial Stability Fund (the ‘Fund’ henceforth) for a union of sovereign countries. By design, the contract prevents country defaults, as well as undesired expected losses, which in a union translate into excessive risk mutualizations. A participant country has greater ability to borrow and share risks than using sovereign debt financing. The Fund contract also provides better incentives for the country to reduce endogenous risks. These efficiency gains arise from the ability of the Fund to offer long-term contingent financial contracts, subject to limited enforcement (LE) and moral hazard (MH) constraints.

New

Globalization and the Ladder of Development: Pushed to the Top or Held at the Bottom?

David Atkin, Arnaud Costinot, and Masao Fukui

We study the relationship between international trade and development in a model where countries differ in their capability, goods differ in their complexity, and capability growth is a function of a country’s pattern of specialization. Theoretically, we show that it is possible for international trade to increase capability growth in all countries and, in turn, to push all countries up the development ladder. This occurs if (i) shifting employment towards more complex sectors raises capability growth and if (ii) foreign competition is tougher in less complex sectors for all countries.

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"Supply disruptions shapes the global internet backbone: new paper shows diversification drives cable entry & surplus, but markets may underprovide diversity."

New Paper by @CaouiHadi & Steck:

https://www.restud.com/diversification-market-entry-and-the-global-internet-backbone/

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"Serfdom in early modern Russia wasn’t inevitable—it was driven by landholding soldiers on the southern frontier. To defend against nomads, the state tied peasants to land, cementing coercive labor."

New paper by @andreamatranga & @Natkhov:

https://www.restud.com/all-along-the-watchtower-military-landholders-and-serfdom-consolidation-in-early-modern-russia/
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"A new method for identifying and estimating consumer preferences when choice sets are constrained due to selection or search, but are not observed"

New paper by Agarwal & Somaini:

https://www.restud.com/demand-analysis-under-latent-choice-constraints/

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Cities surrounded by expensive farmland are denser and agricultural productivity growth has lowered urban density over time in France. Our multi-region structural change framework can explain it.

New paper by Coeurdacier, @teignier & @FlorianOswald

https://www.restud.com/structural-change-land-use-and-urban-expansion/

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