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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Wealth Taxation and Household Saving: Evidence from Assessment Discontinuities in Norway

Marius A. K. Ring

Neither theory nor existing empirical evidence support the notion that wealth taxation reduces saving. Theoretically, the effect is ambiguous due to opposing income and substitution effects, and empirically, the effect may be masked by misreporting responses. Using geographic discontinuities in the Norwegian annual net-wealth tax and third-party-reported data on savings, I find that wealth taxation causes households to save more. Each additional NOK of wealth tax increases annual net financial saving by 3.76, implying that households increase saving enough to offset both current and future wealth taxes.

Employer Credit Checks: Poverty Traps versus Matching Efficiency

Dean Corbae and Andrew Glover

We develop a framework to understand pre-employment credit screening as a signal from credit markets that alleviates adverse selection in labor markets. In our theory, people differ in both their propensity to default on debt and the profits they create for firms that employ them; in our calibrated economy, highly productive workers have a low default probability. This leads firms to create more jobs for those with good credit, which creates a poverty trap: an unemployed worker with poor credit has a low job finding rate, but cannot improve her credit without a job.

Rational Expectations Models with Higher-Order Beliefs

Zhen Huo and Naoki Takayama

We develop a method of solving rational expectations models with dispersed information and dynamic strategic complementarities. In these types of models, the equilibrium outcome hinges on an infinite number of higher-order expectations which require an increasing number of state variables to keep track of. Despite this complication, we prove that the equilibrium outcome always admits a finite-state representation when the signals follow finite ARMA processes.

Direct and Indirect Effects of Subsidized Dual Apprenticeships

Bruno Crépon and Patrick Premand

Public interventions in the apprenticeship market often aim to increase demand or returns. We set up a double-sided experiment with youth and firms to analyze a subsidized dual apprenticeship program. This intervention seeks to relax financial constraints for youth by offering a wage subsidy and to make apprenticeship more attractive by providing vocational training in technical skills to complement on-the-job training. We document a large increase in youth participation in apprenticeship, yet the inflow of apprentices induces little crowding out of traditional apprentices in firms.

Looming Large or Seeming Small? Attitudes Towards Losses in a Representative Sample

Jonathan Chapman, Erik Snowberg, Stephanie Wang, and Colin Camerer

We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N = 3,000). We find that around 50% of the U.S. population is loss tolerant – they are willing to accept negative-expected-value gambles that contain a loss. This is counter to expert predictions and earlier findings which mostly come from lab/student samples that 70-90% of participants are loss averse. Consistent with the different findings in our study versus the prior literature, loss aversion is more prevalent in people with high cognitive ability. Further, our measure of gain-loss attitudes exhibits similar temporal stability and better predictive power outside our survey than measures of risk aversion.

Sowing the Seeds of Financial Crises: Endogenous Asset Creation and Adverse Selection

Nicolas Caramp, UC Davis

What sows the seeds of financial crises, and what policies can help avoid them? I model the interaction between the ex-ante production of assets and ex-post adverse selection in financial markets. Positive shocks that increase market prices exacerbate the production of low quality assets and can increase the likelihood of a financial market collapse. The interest rate and the liquidity premium are endogenous and depend on the functioning of financial markets as well as the total supply of assets (private and public).

The Causes of Ukrainian Famine Mortality, 1932-33

Andrei Markevich, Natalya Naumenko, and Nancy Qian

We construct a novel panel dataset for interwar Soviet Union to study the causes of Ukrainian famine mortality (Holodomor) during 1932-33 and document several facts: i) Ukraine produced enough food in 1932 to avoid famine in Ukraine; ii) 1933 mortality in the Soviet Union was increasing in the pre-famine ethnic Ukrainian population share and iii) was unrelated to food productivity across regions; iv) this pattern exists even outside of Ukraine; v) migration restrictions exacerbated mortality; vi) actual and planned grain procurement were increasing and actual and planned grain retention (production minus procurement) were decreasing in the ethnic Ukrainian population share across regions.

No Free Lunch? Welfare Analysis of Firms Selling Through Expert Intermediaries

Matthew Grennan, Kyle R. Myers, Ashley Swanson, and Aaron Chatterji

We study how firms target and influence expert intermediaries. In our context, pharmaceutical manufacturers provide payments to physicians during promotional interactions. We develop an identification strategy based on plausibly exogenous variation in payments driven by differential exposure to spillovers from academic medical centers’ conflict-of-interest policies. Using a case study of an important class of cardiovascular drugs, we estimate heterogeneous effects of payments on prescribing, with firms targeting highly responsive physicians.

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New paper, "Firm Quality Dynamics and the Slippery Slope of Credit Intervention" by @wenhaoli111 & Li shows that direct government and central bank lending can distort firm quality and fuel future interventions.

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