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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To Own or to Rent? The Effects of Transaction Taxes on Housing Markets

Lu Han, L. Rachel Ngai, and Kevin D. Sheedy

Using sales and leasing data, this paper finds three novel effects of a higher property transaction tax: higher buy-to-rent transactions alongside lower buy-to-own transactions despite both being taxed, a lower sales-to-leases ratio, and a lower price-to-rent ratio. This paper explains these facts by developing a search model with entry of investors and households, households choosing to own or rent in the presence of credit frictions, and homeowners deciding when to move house.

Slum Upgrading and Long-run Urban Development: Evidence from Indonesia

Mariaflavia Harari and Maisy Wong

Developing countries face massive urbanization and slum upgrading is a popular policy to improve shelter for many. Yet, preserving slums at the expense of formal developments can raise concerns of misallocation of land. We estimate causal, long-term impacts of the 1969-1984 KIP program, which provided basic upgrades to 5 million residents covering 25% of land in Jakarta, Indonesia. We assemble high-resolution data on program boundaries and 2015 outcomes and address program selection bias through localized comparisons.

The Origins and Control of Forest Fires in the Tropics

Clare Balboni, Robin Burgess, and Benjamin Olken

Environmental externalities – uncompensated damages imposed on others – lie at the root of climate change, pollution, deforestation and biodiversity loss. Empirical evidence is limited, however, as to how externalities drive private decision making. We study one such behavior, illegal tropical forest fires, using 15 years of daily satellite data covering over 107,000 fires across Indonesia. Weather-induced variation in fire spread risk and variation in who owns surrounding land allow us to identify how far externalities influence the decision to use fire.

What Do Policies Value?

Daniel Björkegren, Joshua E. Blumenstock, and Samsun Knight

When a policy prioritizes one person over another, is it because they benefit more, or because they are preferred? This paper develops a method to uncover the values consistent with observed allocation decisions. We estimate how much each individual benefits from an intervention, and then reconcile the allocation with (i) the welfare weights assigned to different people; (ii) heterogeneous treatment effects of the intervention; and (iii) weights on different outcomes.

The Surrogate Index: Combining Short-Term Proxies to Estimate Long-Term Treatment Effects More Rapidly and Precisely

Susan Athey, Raj Chetty, Guido Imbens, and Hyungseung Kang

A common challenge in estimating the impact of interventions (e.g., job training programs, educational programs) is that many outcomes of interest (e.g., lifetime earnings or other labor market outcomes) are observed with a long delay. In biomedical settings this is often addressed by using short-term outcomes as so-called “surrogates” for the outcome of interest, e.g., tumor size as a surrogate for mortality in cancer studies. We build on this literature by combining multiple, possibly qualitatively distinct, short-term outcomes (e.g., short-run earnings and employment indicators) systematically into a “surrogate index.”

Sanctions and the Exchange Rate

Oleg Itskhoki and Dmitry Mukhin

Trade wars and financial sanctions are again becoming an increasingly common part of the international economic landscape, and the dynamics of the exchange rate are often used in real time to evaluate the effectiveness of sanctions and policy responses. We show that sanctions limiting a country’s exports or freezing its assets depreciate the exchange rate, while sanctions limiting imports appreciate it, even when both types of policies have exactly the same effect on real allocations, including household welfare and government fiscal revenues.

Patents, News, and Business Cycles

Silvia Miranda-Agrippino, Sinem Hacioglu-Hoke, and Kristina Bluwstein

We exploit information in patent applications to construct an instrumental variable for the identification of technology news shocks that relaxes all the identifying assumptions traditionally used in the literature. The instrument recovers news shocks that have no effect on aggregate productivity in the short-run, but are a significant driver of its trend component. The shock prompts a broad-based expansion in anticipation of the future increase in TFP, with output, consumption, and investment all rising well before any material increase in TFP is recorded.

What’s My Employee Worth? The Effects of Salary Benchmarking

Zoe B. Cullen, Shengwu Li, and Ricardo Perez-Truglia

Firms are allowed to use aggregate data on market salaries to set pay, a practice known as salary benchmarking. Using national payroll data, we study firms that gain access to a tool that reveals market benchmarks for each job title. Using a difference-in-differences design, we find that the benchmark information reduces salary dispersion by 25%. Thus, salary dispersion must stem partly from aggregate uncertainty about the salaries offered by other firms.

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