Page 30 – The Review of Economic Studies

Taxes and Growth: New Narrative Evidence from Interwar Britain

15 August 2023

James Cloyne, Nicholas Dimsdale, and Natacha Postel-Vinay

The impact of fiscal policy on economic activity is still a matter of great debate. And, ever since Keynes first commented on it, interwar Britain, 1918-1939, has remained a particularly interesting and contentious case — not least because of its high debt environment and turbulent business cycle. This debate has often focused on the effects of government spending, but little is known about the effects of tax changes.

Strategic Exploration: Preemption and Prioritization

15 August 2023

Qingmin Liu and Yu Fu Wong

This paper analyzes a model of strategic exploration in which competing players independently explore a set of alternatives. The model features a multiple-player multiple-armed bandit problem and captures a strategic trade-off between preemption—covert exploration of alternatives that the opponent will explore in the future—and prioritization—exploration of the most promising alternatives. Our results explain how the strategic trade-off shapes equilibrium behaviors and outcomes, e.g., in technology races between superpowers and R&D competitions between firms.

Which Investors Matter for Equity Valuations and Expected Returns?

15 August 2023

Ralph S.J. Koijen, Robert J. Richmond, and Motohiro Yogo

Based on an asset demand system, we develop a framework to quantify the impact of market trends and changes in regulation on asset prices, price informativeness, and the wealth distribution. Our leading applications are the transition from active to passive investment management and climate-induced shifts in asset demand.

On the Use of Outcome Tests for Detecting Bias in Decision Making

15 August 2023

Ivan A. Canay, Magne Mogstad, and Jack Mountjoy

The decisions of judges, lenders, journal editors, and other gatekeepers often lead to significant disparities across affected groups. An important question is whether, and to what extent, these group-level disparities are driven by relevant differences in underlying individual characteristics, or by biased decision makers. Becker (1957, 1993) proposed an outcome test of bias based on differences in post-decision outcomes across groups, inspiring a large and growing empirical literature.

Superiority Seeking and the Preference for Exclusion

7 August 2023

Alex Imas and Kristof Madarasz

We propose that a person’s desire to consume an object or possess an attribute increases in how much others want but cannot have it. We term this motive imitative superiority-seeking, and show that it generates preferences for exclusion that help explain a host of market anomalies and make novel predictions in a variety of domains.

The Transmission of Commodity Price Super-Cycles

3 August 2023

Felipe Benguria, Felipe Saffie, and Sergio Urzua

We examine two key channels through which commodity price super-cycles affect the economy: a wealth channel, through which higher commodity prices increase domestic demand, and a cost channel, through which they induce wage increases. By exploiting regional variation in exposure to commodity price shocks and administrative firm-level data from Brazil, we empirically disentangle these transmission channels.

New Joint Managing Editor

31 July 2023

Xavier d’Haultfoeuille appointed as Joint Managing Editor

Sources and Transmission of Country Risk

30 July 2023

Tarek A. Hassan, Jesse Schreger, Markus Schwedeler, and Ahmed Tahoun

We use textual analysis of earnings conference calls held by listed firms around the world to measure the amount of risk managers and investors at each firm associate with each country at each point in time. Flexibly aggregating this firm-country-quarter-level data allows us to systematically identify spikes in perceived country risk (“crises”) and document their source and pattern of transmission to foreign firms.

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.@lindaawuu and coauthor study two estate tax reforms in Taiwan and find quick and asymmetric responses. Reported estates are more elastic to tax hikes than tax cuts. 👇

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"Sellers often choose sudden, unannounced price drops—unlike standard models with forward-looking, strategic buyers. We show why a seller would prefer this."

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