NewInference Based on Time-Varying SVARs Identified with Sign Restrictions 16 January 2026 Jonas E. Arias, Juan F. Rubio Ramírez, Minchul Shin, and Daniel F. WaggonerWe propose an approach for Bayesian inference in time-varying structural vector autoregressions (SVARs) identified with sign restrictions. The linchpin of our approach is a class of rotation-invariant time-varying SVARs in which the prior and posterior densities of any sequence of structural parameters belonging to the class are invariant to orthogonal transformations of the sequence.
NewJumpstarting an International Currency 16 January 2026 Saleem Bahaj and Ricardo ReisWhile the USD dominates cross-border transactions today, a few other currencies are also used internationally. This paper shows that central bank policies that reduce the volatility of borrowing costs for foreign firms in domestic currency can trigger a jumpstart of the currency’s international status, because firms’ choices of the currency of their working capital complement their sales invoicing.
NewDestabilizing Capital Flows Amid Global Inflation 16 January 2026 Julien Bengui and Louphou CoulibalyOver the latest monetary policy tightening cycle, capital has been flowing from low-inflation countries to high-inflation countries. This pattern of capital flows is consistent with the predictions of an open-economy model with nominal rigidities where cost-push shocks generate an inflationary episode and capital flows freely across countries.
NewThe Illiquidity of Water Markets 11 January 2026 Javier D. Donna and José A. Espín-SánchezWe investigate the efficiency of a market relative to a non-market institution—an auction relative to a quota—as allocation mechanisms in the presence of frictions. We use data from water markets in southeastern Spain and explore a specific change in the institutions to allocate water. On the one hand, frictions arose because poor farmers were liquidity constrained. On the other hand, farmers who were part of the wealthy elite were not liquidity constrained.
NewPatent Term, Innovation, and the Role of Technology Disclosure Externalities 11 January 2026 Fabio BertolottiI examine the impact of patent term on R&D and innovation in the presence of policy anticipation, common in real-world settings. Using a difference-in-difference design, I exploit quasi-experimental variation in U.S. patent term across technological fields due to the ratification of TRIPs agreements in 1995. Despite a general increase in average patent term, in most fields innovators faced a considerable probability of patent term reduction for future innovations.
NewSelection in Surveys: Using Randomized Incentives to Detect and Account for Nonresponse Bias 6 January 2026 Deniz Dutz, Ingrid Huitfeldt, Santiago Lacouture, Magne Mogstad, Alexander Torgovitsky, and Winnie van DijkWe show how to use randomized participation incentives to test and account for nonresponse bias in surveys. We first use data from a survey about labor market conditions, linked to full-population administrative data, to provide evidence of large differences in labor market outcomes between survey participants and nonparticipants, differences which would not be observable to an analyst who only has access to the survey data.
NewEducation and the Margins of Cyclical Adjustment in the Labor Market 5 January 2026 Cynthia L. DonigerAllocative 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.
NewThe Macroeconomics of Irreversibility 5 January 2026 Isaac Baley and Julio Andrés BlancoWe 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.
