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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.

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Version 2.0 of the National Elections Database is online!
We now cover presidential and parliamentary elections 1789–2023, extending the post-1945 data of Electoral Turnovers @RevEconStudies (https://academic.oup.com/restud/advance-article/doi/10.1093/restud/rdae108/7899604).
w/ @benjaminmarx and @vincent_rollet

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``Many networks naturally form as people come together to form subgraphs, e.g. as coauthors of a paper, or other teams. This is the basis for a new, computationally tractable method of estimating network formation."

From Chandrasekhar & @JacksonmMatt:

https://www.restud.com/a-network-formation-model-based-on-subgraphs/

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Recently accepted to #REStud, ``Simultaneous Search and Adverse Selection," from Auster, Gottardi and Wolthoff @rpwolthoff:

https://www.restud.com/simultaneous-search-and-adverse-selection/

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Recently accepted to #REStud, ``Affiliated Common Value Auctions with Costly Entry," from Murto & Välimäki:

https://www.restud.com/affiliated-common-value-auctions-with-costly-entry/

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