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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Behavioral Causal Inference

Ran Spiegler

When inferring causal effects from correlational data, a common practice by professional researchers but also lay people is to control for potential confounders. Inappropriate controls produce erroneous causal inferences. I model decision-makers who use endogenous observational data to learn actions’ causal effect on payoff-relevant outcomes. Different decision-maker types use different controls. Their resulting choices affect the very correlations they learn from, thus calling for equilibrium analysis of the steady-state welfare cost of bad controls.

Making Decisions under Model Misspecification

Simone Cerreia-Vioglio, Lars Peter Hansen, Fabio Maccheroni, and Massimo Marinacci

We use decision theory to confront uncertainty that is sufficiently broad to incorporate “models as approximations.” We presume the existence of a featured collection of what we call “structured models” that have explicit substantive motivations. The decision maker confronts uncertainty through the lens of these models, but also views these models as simplifications, and hence, as misspecified.

Pseudo Lindahl Equilibrium as a Collective Choice Rule

Faruk Gul and Wolfgang Pesendorfer

A collective choice problem specifies a finite set of alternatives from which a group of expected utility maximizers must choose. We associate a collective pseudo market with every collective choice problem and establish the existence and efficiency of pseudo Lindahl equilibrium (PLE) allocations. We also associate a cooperative bargaining problem with every collective choice problem and define a set-valued solution concept, the ω-weighted Nash bargaining set where ω is a vector of welfare weights. We provide axioms that characterize the ω-weighted Nash bargaining set.

Surviving Childhood: Effects of Removing a Child From Home

Ronja Helénsdotter

This paper studies the effects of the court-ordered removal of children from home on health, crime, and education. To isolate causal effects, I exploit quasi-random variation in judge assignment together with across-judge variation in the tendency to favor removal in an instrumental variable (IV) design. Using a novel data set (N=26,579) based on Swedish court documents that I transcribe and link with detailed register data, I find that court-ordered out-of-home placement has large adverse effects on the mortality of the marginal child.

Good Dispersion, Bad Dispersion

Matthias Kehrig and Nicolas Vincent

We document that most dispersion in marginal revenue products of inputs occurs across plants within firms rather than between firms. This is commonly thought to reflect misallocation: dispersion is “bad.” However, we show that eliminating frictions hampering internal capital markets in a multi-plant firm model may in fact increase productivity dispersion and raise output: dispersion can be “good.” This arises as firms optimally stagger investment activity across their plants over time to avoid raising costly external finance, instead relying on reallocating internal funds.

Public Listing Choice with Persistent Hidden Information

Francesco Celentano and Mark Rempel

How much does firm intangibility amplify CEOs’ persistent private information and reduce firms’ public listing propensity? We develop a model of competing public and private investors financing firms heterogeneously exposed to persistent private cash flows. Equilibrium financing is driven by information rent differentials in CEO compensation. We validate and structurally estimate the model using firm listing and CEO compensation data.

Hiring as Exploration

Danielle Li, Lindsey Raymond, and Peter Bergman

This paper views hiring as a contextual bandit problem: to find the best workers over time, firms must balance “exploitation” (selecting from groups with proven track records) with “exploration” (selecting from under-represented groups to learn about quality). Yet modern hiring algorithms, based on supervised learning approaches, are designed solely for exploitation. Instead, we build a resume screening algorithm that values exploration by evaluating candidates according to their statistical upside potential.

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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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