Accepted Papers

The Review of Economic Studies is one of the most highly respected academic journals in the field of economics. It is known for publishing leading research in all areas of economics, from microeconomics to macroeconomics. The journal is published by the Oxford University Press.

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Fines and Financial Wellbeing

Steven Mello

While survey evidence suggests widespread financial fragility in the U.S., causal evidence on the implications of typical, negative income shocks is scarce. I estimate the impact of speeding fines on household finances using administrative traffic citation records and a panel of credit reports. Event studies reveal that fines averaging $195 are associated with a $34 increase in unpaid bills in collections. Given additional evidence that fine payment explains this effect and that default is the “last resort” for households, I interpret this finding as suggesting rates of inability to meet unplanned expenses which are consistent with the survey evidence.

New

The Economics of Financial Stress

Dmitriy Sergeyev, Chen Lian, and Yuriy Gorodnichenko

We study the psychological costs of financial constraints and their economic consequences. Using a representative survey of U.S. households, we document the prevalence of financial stress in U.S. households and a strong relationship between financial stress and measures of financial constraints. We incorporate financial stress into an otherwise standard dynamic model of consumption and labor supply. We emphasize two key results. First, both financial stress itself and naivete about financial stress are important components of a psychology-based theory of the poverty trap.

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Electoral Turnovers

Benjamin Marx, Vincent Pons, and Vincent Rollet

In most national elections, voters face a key choice between continuity and change. Electoral turnovers occur when the incumbent candidate or party fails to win reelection. To understand how turnovers affect national outcomes, we study all presidential and parliamentary elections held globally between 1946 and 2018. We document the prevalence of turnovers over time and estimate their effects on economic performance, human development, and the quality of democracy.

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A Dynamic Model of Authoritarian Social Control

Roger Lagunoff

Authoritarian regimes often use targeted social control – unequal application of the law to limit expressive freedom and enforce social conformity. At the same time, their methods appear less draconian than in the past. In this model, an authority structures punishments and rewards to compel adherence to its preferred norm. The authority’s commitment is time-limited and depends on imperfectly informative signals of a citizen’s behavior. Given two citizens with the same observed behavior, the authority imposes harsher punishments on the poorer and/or ex ante dissident individual.

New

Robustly Optimal Mechanisms for Selling Multiple Goods

Yeon-Koo Che and Weijie Zhong

We study robustly optimal mechanisms for selling multiple items. The seller maximizes revenue against a worst-case distribution of a buyer’s valuations within a set of distributions, called an “ambiguity” set. We identify the exact forms of robustly optimal selling mechanisms and the worst-case distributions when the ambiguity set satisfies various moment conditions on the values of subsets of goods.

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Auctioning Long-Term Projects under Financial Constraints

Malin Arve and David Martimort

We consider a procurement auction for the provision of a basic service to which an add-on must later be appended. Potential providers are symmetric, have private information on their cost for the basic service and the winning firm must also implement the add-on. To finance value-enhancing activities related to the add-on, this firm may need extra funding by outside financiers. Non-verifiable effort related to these activities creates a moral hazard problem which makes the firm’s payoff function for the second period concave in returns over the relevant range.

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Untying the Knot: How Child Support and Alimony Affect Couples’ Dynamic Decisions and Welfare

Hanno Foerster

In many countries, divorce law mandates post-marital maintenance payments (child support and alimony) to insure the lower earner in married couples against financial losses upon divorce. This paper studies how maintenance payments affect couples’ intertemporal decisions and welfare. I develop a dynamic model of family labor supply, home production, savings, and divorce and estimate it using Danish register and survey data. The model captures the policy tradeoff between providing insurance to the lower earner and enabling couples to specialize efficiently, on the one hand, and maintaining labor supply incentives for divorcees, on the other hand.

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Markups and Inequality

Corina Boar and Virgiliu Midrigan

We characterize optimal product market policy in an unequal economy in which firm ownership is concentrated and markups increase with firm market shares. We study the problem of a utilitarian regulator who designs revenue-neutral interventions in the product market. We show that optimal policy increases product market concentration. This is because policies that encourage larger producers to expand improve allocative efficiency, increase the demand for labor and equilibrium wages.

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Tariffs will lead to more immigration.
Why?
Because tariffs reduce wages on the other side of the border and evidence from @RevEconStudies shows that "a 10% increase in Mexican wages reduces migration rates and durations"

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Fantastic to see Hanno‘s original JM paper finally in print. Very interesting work on how alimony payments affect incentives to work of ex-spouses and what this means for welfare. Congratulations, Hanno. Very proud of you!

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"What are the consequences of the psychological costs of financial constraints in a dynamic consumption-saving-labor supply model calibrated to survey evidence?"

Recently accepted to #REStud, from @d_sergeyev, @ChenLian92 & @YGorodnichenko:

https://www.restud.com/the-economics-of-financial-stress/

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Very excited that my JMP on the welfare implications of child support and alimony got accepted @RevEconStudies! Huge thanks to my advisors, @TertiltMichele and Gerard van den Berg, to the editor @SorryToBeKurt and to everyone who provided feedback at various stages of the paper!

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