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Education and the Margins of Cyclical Adjustment in the Labor Market

5 January 2026

Cynthia L. Doniger

Allocative wages—the labor costs considered when deciding to form or dissolve a long-term employment relationship—are more sensitive to cyclical conditions for more educated workers. Specifically, college-educated workers’ allocative wages are highly pro-cyclical, while high school dropouts’ wages exhibit only moderate cyclicality.

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The Macroeconomics of Irreversibility

5 January 2026

Isaac Baley and Julio Andrés Blanco

We study aggregate capital dynamics in an investment model with idiosyncratic productivity shocks, fixed capital adjustment costs, and irreversibility driven by a wedge between capital purchase and resale prices. We derive sufficient statistics that capture the role of investment frictions in aggregate capital fluctuations, measure these statistics using investment microdata, and exploit them to discipline the capital price wedge.

New

Bank Information Production Over the Business Cycle

18 December 2025

Cooper Howes and Gregory Weitzner

The information banks produce drives their lending decisions and macroeconomic outcomes, but this information is inherently difficult to analyze because it is private. We construct a novel measure of bank information quality from confidential regulatory data that include banks’ private risk assessments for US corporate loans.

New

Inflation risk and the finance-growth nexus

18 December 2025

Alexandre Corhay and Jincheng Tong

When firms finance using long-term nominal debt issued by financial intermediaries, changes in expected inflation lead to a wealth transfer across sectors. Higher expected inflation decreases firms’ real liabilities and default risk, which helps reduce debt overhang. However, it hurts intermediaries’ real assets, leading to a contraction in credit supply.

New

Devaluations, Deposit Dollarization, and Household Heterogeneity

18 December 2025

Francesco Ferrante and Nils Gornemann

We study the aggregate and redistributive effects of currency devaluations in a small open economy model with leverage-constrained banks and heterogeneous households. Our framework captures three stylized facts about financial dollarization in emerging economies: i) a sizable share of domestic deposits is denominated in foreign currency; ii) these deposits represent significant foreign currency liabilities for local banks; and iii) dollar deposits are mainly held by wealthier households.

New

Costly Multidimensional Screening

16 December 2025

Frank Yang

A screening instrument is costly if it is socially wasteful and productive otherwise. A principal screens an agent with multidimensional private information and quasilinear preferences that are additively separable across two components: a one-dimensional productive component and a multidimensional costly component. Can the principal improve upon simple one-dimensional mechanisms by also using the costly instruments?

New

The Economics of Equilibrium with Indivisible Goods

16 December 2025

Ravi Jagadeesan and Alexander Teytelboym

This paper develops a theory of competitive equilibrium with indivisible goods based entirely on economic conditions on demand. The key idea is to analyze complementarity and substitutability between bundles of goods, rather than merely between goods themselves.

New

Bridges

16 December 2025

Anna Tompsett

Bridges are critical but sparse links in land transport networks. I exploit quasi-experimental variation in bridge construction over major rivers in the United States to measure the causal effects of land transport infrastructure. Bridges are more often built upstream than downstream of tributary confluences—where smaller rivers join larger rivers—generating local differences in connectivity. These local connectivity advantages have negative effects on per capita income.

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