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 examine how the rise of institutional ownership has influenced firms’ political activities. We find that, after the acquisition of a large stake, a firm’s political action committee giving mirrors more closely that of the acquiring investor. Consistent with a causal interpretation, this pattern is also observed for acquisitions driven by new index inclusions.

Reference-dependent preferences can explain several puzzling observations about organizational change. We introduce a dynamic model in which a firm bargains with loss-averse workers about organizational change and wages. We show that change is often stagnant or slow for many periods, followed by a sudden boost in productivity triggered by a crisis.

We 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.

While 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.

Over 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.

We 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.