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The US, Economic News, and the Global Financial Cycle

Christoph E. Boehm and T. Niklas Kroner

We provide evidence for a causal link between the US economy and the global financial cycle. Using intraday data, we show that US macroeconomic news releases have large and significant effects on global risky asset prices. Stock price indexes of 27 countries, the VIX, and commodity prices all jump instantaneously upon news releases. The responses of stock indexes co-move across countries and are large—often comparable in size to the response of the S&P 500.

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How to sample and when to stop sampling: The generalized Wald problem and minimax policies

Karun Adusumilli

We study sequential experiments where sampling is costly and a decision-maker aims to determine the best treatment for full scale implementation by (1) adaptively allocating units between two possible treatments, and (2) stopping the experiment when the expected welfare (inclusive of sampling costs) from implementing the chosen treatment is maximized. Working under a continuous time limit, we characterize the optimal policies under the minimax regret criterion.

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Unemployment insurance reforms and labor market dynamics

Benjamin Hartung, Philip Jung, and Moritz Kuhn

A key question in labor market research is how the unemployment insurance system affects unemployment rates and labor market dynamics. We provide new answers to this old question by studying one of the largest unemployment insurance reforms in recent decades, the German Hartz reforms. On average, lower separation rates into unemployment account for 76% of declining unemployment after the reform, a fact unexplained by existing research focusing on job-finding rates.

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‘Bad’ Oil, ‘Worse’ Oil and Carbon Misallocation

Renaud Coulomb, Fanny Henriet, and Léo Reitzmann

Not all barrels of oil are created equal: their extraction varies in both private cost and carbon intensity. Leveraging a comprehensive micro-dataset on world oil fields, alongside detailed estimates of carbon intensities and private extraction costs, this study quantifies the additional emissions and costs from having extracted the ’wrong’ deposits. We do so by comparing historical deposit-level supplies to counterfactuals that factor in pollution costs, while keeping annual global consumption unchanged.

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Identification and Inference in First-Price Auctions with Risk Averse Bidders and Selective Entry

Xiaohong Chen, Matthew Gentry, Tong Li, and Jingfeng Lu

We study identification and inference in first-price auctions with risk averse bidders and selective entry, building on a flexible framework we call the Affiliated Signal with Risk Aversion (AS-RA) model. Assuming exogenous variation in either the number of potential bidders (N) or a continuous instrument (z) shifting opportunity costs of entry, we provide a sharp characterization of the nonparametric restrictions implied by equilibrium bidding. This characterization implies that risk neutrality is nonparametrically testable.

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Institutions, Comparative Advantage, and the Environment

Joseph S. Shapiro

This paper proposes that strong institutions provide comparative advantage in clean industries, and thereby improve a country’s environmental quality. I study financial, judicial, and labor market institutions. Five complementary tests evaluate and assess implications of this hypothesis. First, industries that depend on institutions are clean. Second, strong institutions increase relative exports in clean industries. Third, an industry’s complexity helps explain the link between institutions and clean goods.

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A Network Formation Model Based on Subgraphs

Arun G. Chandrasekhar and Matthew O. Jackson

We develop a new class of random graph models for the statistical estimation of network formation—subgraph generated models (SUGMs). Various subgraphs—e.g., links, triangles, cliques, stars—are generated and their union results in a network. We show that SUGMs are identified and establish the consistency and asymptotic distribution of parameter estimators in empirically relevant cases. We show that a simple four-parameter SUGM matches basic patterns in empirical networks more closely than four standard models (with many more dimensions).

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This paper started with data. We were convinced that the discrepancy between book and market values of banks was key to understanding the data. We then developed a theory where, with a simple model, only one state variable driving Tobin's Q, you can explain several data moments.

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"We provide a guide for researchers on how to estimate gene-environment (GxE) interplay, using school-starting age as a case study. We argue that gene-environment (G x E) studies can help

(i) assess treatment effect heterogeneity,
(ii) test theoretical predictions, and 👇

1/

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"We are thrilled to share that our latest research is now published in @RevEconStudies! 🎉Check it out here:
https://www.restud.com/a-q-theory-of-banks/

We look forward to hearing your thoughts! "

@JulianeBegenau, @SakiBigio, Majerovitz, and Vieyra

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