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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.

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Why/how should multiple hypothesis testing be done differently in empirical work? We give an economic foundation trading off research costs and incentives with implications for empirical practice.

New paper by @VivianoDavide, Wüthrich, and Niehaus:

https://www.restud.com/a-model-of-multiple-hypothesis-testing/

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New paper by Liski & Salanié:

https://www.restud.com/catastrophes-delays-and-learning/

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Supply-side climate policies in the oil market: Higher taxes reduce exploration and discoveries. If only OECD countries adopt this policy, 47–73% is offset by non-OECD countries.

New paper by @AhlvikLassi, @jorgenja, Hamang, & @tfharding:

https://www.restud.com/quantifying-supply-side-climate-policies/

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"We prove a CLT for strategic network formation with homophilous agents. This enables inference on statistics derived from a single large network. We discuss practical procedures."

New Paper by Leung & Moon:

https://www.restud.com/normal-approximation-in-large-network-models/

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