NewFirm Quality Dynamics and the Slippery Slope of Credit Intervention 24 November 2025 Wenhao Li and Ye LiA salient trend in crisis intervention has emerged in recent decades: government and central banks have offered funding directly to nonfinancial firms, bypassing banks and other credit intermediaries. We analyze the long-term consequences of such policies by focusing on firm quality dynamics. In a laissez-faire economy, firms with high productivity are more likely to survive crises than those with low productivity.
NewChoice and Opportunity Costs 24 November 2025 Paola Manzini, Marco Mariotti, and Levent ÜlküWe define the (physical) opportunity cost of a choice x as the alternative that would be chosen if x were not available, and the opportunity cost of any unchosen alternative as x itself. The agent has preferences over pairs consisting of alternatives and their opportunity costs. Because costs affect choice and vice-versa, choice results from an intrapersonal equilibrium rather than from simple maximisation.
NewMarkups Across Space and Time 16 November 2025 Eric Anderson, Sergio Rebelo, and Arlene WongIn this paper, we provide direct evidence on the behavior of markups in the retail sector across space and time. Markups are measured using gross margins. We consider three levels of aggregation: the retail sector as a whole, the firm, and the product level.
NewLifecycle Wages and Human Capital Investments: Selection and Missing Data 16 November 2025 Laurent Gobillon, Thierry Magnac, and Sébastien RouxWe derive wage equations with individual specific coefficients from a structural model of human capital investment over the life cycle. This model allows for interruptions in labour market participation and deals with missing data and attrition problems. We propose a new framework that deals with missingness at random and is based on factor decompositions that allow for flexible control of selection.
NewDiversification, Market Entry, and the Global Internet Backbone 2 November 2025 El Hadi Caoui and Andrew SteckIn many industries, buyers diversify their supplier base to manage supplier disruption risk. We investigate the importance of such diversification as a determinant of demand and supplier entry in the context of the internet backbone, the worldwide network of undersea fiber-optic cables that underpins the internet. We specify a model of international bandwidth demand and cable operators’ dynamic entry and supply choices. The model is estimated using novel data on cross-border data flows, prices, cable characteristics, and disruptions.
NewDemand Stimulus as Social Policy 2 November 2025 Alan J. Auerbach, Yuriy Gorodnichenko, and Daniel MurphyWe exploit a panel of city-level data with rich demographic information to estimate the distributional effects of Department of Defense spending and its effects on a range of social outcomes. The income and employment generated by defense spending accrue predominantly to households without a bachelor’s degree. These households as well as Black and Hispanic households tend to disproportionately benefit from this spending.
Taxes Depress Corporate Borrowing: Evidence from Private Firms 2 November 2025 Ivan T. Ivanov, Luke Pettit, and Toni M. WhitedWe use variation in state corporate income tax rates to re-examine the relation between taxes and corporate leverage. Contrary to prior research, corporate leverage rises after tax cuts for small private firms. An estimated dynamic equilibrium model shows that tax cuts make capital more productive and spur the use of leverage. Tax cuts also produce more distant default thresholds and lower credit spreads.
All Along the Watchtower: Military Landholders and Serfdom Consolidation in Early Modern Russia 2 November 2025 Andrea Matranga and Timur NatkhovThis article examines the emergence of coercive labor institutions using the case of serfdom in early modern Russia. We argue that serfdom consolidated under the pressure of landholding military elites who gained political influence due to the prolonged struggle with steppe nomads. To contain nomadic raids, the Russian state erected defense lines on the southern frontier, and granted land in the area to soldiers in charge of its defense. The soldiers could not farm while on defense duty, nor could they compete in the market for peasant labor, as the land had been selected for its defensive rather than agricultural value.
