Page 45 – The Review of Economic Studies

The Cost of Wage Rigidity

12 February 2023

Ester Faia and Vincenzo Pezone

Private 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 Zhang

Borrowers 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 Li

Growth 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 Moreira

This 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.

Left-Digit Bias at Lyft

8 February 2023

John A. List, Ian Muir, Devin Pope, and Gregory Sun

Left-digit bias (or 99-cent pricing) has been discussed extensively in economics, psychology, and marketing. Despite this, we show that the rideshare company, Lyft, was not using a 99-cent pricing strategy prior to our study.

The Lost Capital Asset Pricing Model

8 February 2023

Daniel Andrei, Julien Cujean, and Mungo Wilson

We provide a novel explanation for the empirical failure of the CAPM despite its widespread practical use. In a rational-expectations economy in which information is dispersed, variation in expected returns over time and across investors creates an informational gap between investors and the empiricist.

The Effects of Partial Employment Protection Reforms: Evidence from Italy

5 February 2023

Diego Daruich, Sabrina Di Addario, and Raffaele Saggio

We combine matched employer-employee data with firms’ financial records to study a 2001 Italian reform that lifted constraints on the employment of temporary contract workers while maintaining rigid employment protection regulations for employees hired under permanent contracts.

Regional Consumption Responses and the Aggregate Fiscal Multiplier

5 February 2023

Bill Dupor, Marios Karabarbounis, Marianna Kudlyak, and M. Saif Mehkari

We use regional variation in the American Recovery and Reinvestment Act (2009-2012) to analyze the effect of government spending on consumer spending.

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