The Review of Economic Studies is one of the core journals in economics. It is essential reading for economists, consistently ranking among the top five journals.

We propose a simple and general model of experimentation in which reaching untried levels of a stock variable may, after a stochastic delay, lead to a catastrophe. Hence, at any point in time a catastrophe might well be under way, due to past experiments. We show how to measure this legacy of the past from prior beliefs and the chronicle of stock levels.

What are the effects of supply-side climate policies in the oil market? We use global company-level data to estimate the impact of 84 reforms of production taxes between 2000 and 2019 on oil production, exploration, and discoveries. We find that higher taxes primarily reduce companies’ exploration expenditures and oil discoveries, and also reduce short-term production of unconventional oil.

We prove a central limit theorem for network formation models with strategic interactions and homophilous agents. Since data often consists of observations on a single large network, we consider an asymptotic framework in which the network size diverges. We argue that a modification of “stabilization” conditions from the literature on geometric graphs provides a useful high-level formulation of weak dependence which we utilize to establish an abstract central limit theorem.

How do regional productivity shocks or transportation infrastructure improvements affect aggregate welfare? In a general class of spatial equilibrium models, we provide a formula for aggregate welfare changes, decomposed into terms associated with (i) technology (Fogel 1964, Hulten 1978), (ii) spatial dispersion of marginal utility, (iii) fiscal externalities, (iv) technological externalities, and (v) redistribution.

Existing tests of reference-dependent preferences assume universal loss aversion. This paper examines the implications of heterogeneity in gain-loss attitudes for such tests. In experiments on labor supply and exchange behavior, we first measure gain-loss attitudes and then study a canonical treatment effect that distinguishes different models of reference dependence.

We present a method to determine optimal monetary policy in heterogeneous-agent economies with nominal frictions and aggregate shocks, under various assumptions regarding fiscal policy. We analyze models with either sticky prices or sticky wages. In the sticky-price economy, when fiscal policy is optimally set, optimal monetary policy implements price stability.