Diagnostic Business Cycles 14 February 2023 Francesco Bianchi, Cosmin Ilut, and Hikaru SaijoA large psychology literature argues that, due to selective memory recall, decision-makers’ forecasts of the future are overly influenced by the perceived news.
A Macro-Finance Model with Sentiment 14 February 2023 Peter MaxtedThis paper incorporates diagnostic expectations into a general equilibrium macroeconomic model with a financial intermediary sector. Diagnostic expectations are a forward-looking model of extrapolative expectations that overreact to recent news.
International Spillovers and Bailouts 14 February 2023 Marina Azzimonti and Vincenzo QuadriniWe study how cross-country macroeconomic spillovers caused by sovereign default affect equilibrium bailouts.
Human Capital, Female Employment, and Electricity: Evidence from the Early 20th-Century United States 12 February 2023 Daniela VidartThis paper revisits the link between electrification and the rise in female labor force participation (LFP), and presents theoretical and empirical evidence showing that electrification triggered a rise in female LFP by increasing market opportunities for skilled women.
The Cost of Wage Rigidity 12 February 2023 Ester Faia and Vincenzo PezonePrivate efficiency of wage rigidity has taken center stage in economics. Measuring its effects has proven elusive for lack of actual wage data.
Dynamic Asset-Backed Security Design 12 February 2023 Emre Ozdenoren, Kathy Yuan, and Shengxing ZhangBorrowers obtain liquidity by issuing securities backed by the current period payoff and resale price of a long-lived collateral asset, and they are privately informed about the payoff distribution.
A Theory of Falling Growth and Rising Rents 9 February 2023 Philippe Aghion, Antonin Bergeaud, Timo Boppart, Peter J. Klenow, and Huiyu LiGrowth has fallen in the U.S. amid a rise in firm concentration. Market share has shifted to low labor share firms, while within-firm labor shares have actually risen.
Risk Classification in Insurance Markets with Risk and Preference Heterogeneity 9 February 2023 Vitor Farinha Luz, Piero Gottardi, and Humberto MoreiraThis paper studies a competitive model of insurance markets in which consumers are privately informed about their risk and risk preferences. We provide a characterization of the equilibria, which depend non-trivially on consumers’ type distribution, a desirable feature for policy analysis.
