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Journal Cover Quarterly Journal of Economics
  [SJR: 20.761]   [H-I: 186]   [277 followers]  Follow
   Hybrid Journal Hybrid journal (It can contain Open Access articles)
   ISSN (Print) 0033-5533 - ISSN (Online) 1531-4650
   Published by Oxford University Press Homepage  [370 journals]
  • Measuring the Sensitivity of Parameter Estimates to Estimation Moments *
    • Authors: Andrews I; Gentzkow M, Shapiro JM.
      Pages: 1553 - 1592
      Abstract: AbstractWe propose a local measure of the relationship between parameter estimates and the moments of the data they depend on. Our measure can be computed at negligible cost even for complex structural models. We argue that reporting this measure can increase the transparency of structural estimates, making it easier for readers to predict the way violations of identifying assumptions would affect the results. When the key assumptions are orthogonality between error terms and excluded instruments, we show that our measure provides a natural extension of the omitted variables bias formula for nonlinear models. We illustrate with applications to published articles in several fields of economics. JEL Codes: C10, C52.
      PubDate: 2017-06-06
      DOI: 10.1093/qje/qjx023
      Issue No: Vol. 132, No. 4 (2017)
  • The Growing Importance of Social Skills in the Labor Market *
    • Authors: Deming DJ.
      Pages: 1593 - 1640
      Abstract: AbstractThe labor market increasingly rewards social skills. Between 1980 and 2012, jobs requiring high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Math-intensive but less social jobs—including many STEM occupations—shrank by 3.3 percentage points over the same period. Employment and wage growth were particularly strong for jobs requiring high levels of both math skill and social skills. To understand these patterns, I develop a model of team production where workers “trade tasks” to exploit their comparative advantage. In the model, social skills reduce coordination costs, allowing workers to specialize and work together more efficiently. The model generates predictions about sorting and the relative returns to skill across occupations, which I investigate using data from the NLSY79 and the NLSY97. Using a comparable set of skill measures and covariates across survey waves, I find that the labor market return to social skills was much greater in the 2000s than in the mid-1980s and 1990s. JEL Codes: I20, I24, J01, J23, J24, J31.
      PubDate: 2017-06-06
      DOI: 10.1093/qje/qjx022
      Issue No: Vol. 132, No. 4 (2017)
  • Uncertainty Traps *
    • Authors: Fajgelbaum PD; Schaal E, Taschereau-Dumouchel M.
      Pages: 1641 - 1692
      Abstract: AbstractWe develop a theory of endogenous uncertainty and business cycles in which short-lived shocks can generate long-lasting recessions. In the model, higher uncertainty about fundamentals discourages investment. Since agents learn from the actions of others, information flows slowly in times of low activity and uncertainty remains high, further discouraging investment. The economy displays uncertainty traps: self-reinforcing episodes of high uncertainty and low activity. Although the economy recovers quickly after small shocks, large temporary shocks may have long-lasting effects on the level of activity. The economy is subject to an information externality but uncertainty traps may remain in the efficient allocation. Embedding the mechanism in a standard business cycle framework, we find that endogenous uncertainty increases the persistence of large recessions and improves the performance of the model in accounting for the Great Recession. JEL Codes: E32, D80.
      PubDate: 2017-05-29
      DOI: 10.1093/qje/qjx021
      Issue No: Vol. 132, No. 4 (2017)
  • Optimal Tax Progressivity: An Analytical Framework *
    • Authors: Heathcote J; Storesletten K, Violante GL.
      Pages: 1693 - 1754
      Abstract: AbstractWhat shapes the optimal degree of progressivity of the tax and transfer system' On the one hand, a progressive tax system can counteract inequality in initial conditions and substitute for imperfect private insurance against idiosyncratic earnings risk. On the other hand, progressivity reduces incentives to work and to invest in skills, distortions that are especially costly when the government must finance public goods. We develop a tractable equilibrium model that features all of these trade-offs. The analytical expressions we derive for social welfare deliver a transparent understanding of how preference, technology, and market structure parameters influence the optimal degree of progressivity. A calibration for the U.S. economy indicates that endogenous skill investment, flexible labor supply, and the desire to finance government purchases play quantitatively similar roles in limiting optimal progressivity. In a version of the model where poverty constrains skill investment, optimal progressivity is close to the U.S. value. An empirical analysis on cross-country data offers support to the theory. JEL Codes: D30, E20, H20, H40, J22, J24.
      PubDate: 2017-06-23
      DOI: 10.1093/qje/qjx018
      Issue No: Vol. 132, No. 4 (2017)
  • Household Debt and Business Cycles Worldwide *
    • Authors: Mian A; Sufi A, Verner E.
      Pages: 1755 - 1817
      Abstract: AbstractAn increase in the household debt to GDP ratio predicts lower GDP growth and higher unemployment in the medium run for an unbalanced panel of 30 countries from 1960 to 2012. Low mortgage spreads are associated with an increase in the household debt to GDP ratio and a decline in subsequent GDP growth, highlighting the importance of credit supply shocks. Economic forecasters systematically over-predict GDP growth at the end of household debt booms, suggesting an important role of flawed expectations formation. The negative relation between the change in household debt to GDP and subsequent output growth is stronger for countries with less flexible exchange rate regimes. We also uncover a global household debt cycle that partly predicts the severity of the global growth slowdown after 2007. Countries with a household debt cycle more correlated with the global household debt cycle experience a sharper decline in growth after an increase in domestic household debt. JEL Codes: D14, E21, E32, E44, E51, G01.
      PubDate: 2017-05-26
      DOI: 10.1093/qje/qjx017
      Issue No: Vol. 132, No. 4 (2017)
  • The Deposits Channel of Monetary Policy *
    • Authors: Drechsler I; Savov A, Schnabl P.
      Pages: 1819 - 1876
      Abstract: AbstractWe present a new channel for the transmission of monetary policy, the deposits channel. We show that when the Fed funds rate rises, banks widen the spreads they charge on deposits, and deposits flow out of the banking system. We present a model where this is due to market power in deposit markets. Consistent with the market power mechanism, deposit spreads increase more and deposits flow out more in concentrated markets. This is true even when we control for lending opportunities by only comparing different branches of the same bank. Since deposits are the main source of liquid assets for households, the deposits channel can explain the observed strong relationship between the liquidity premium and the Fed funds rate. Since deposits are also a uniquely stable funding source for banks, the deposits channel impacts bank lending. When the Fed funds rate rises, banks that raise deposits in concentrated markets contract their lending by more than other banks. Our estimates imply that the deposits channel can account for the entire transmission of monetary policy through bank balance sheets. JEL Codes: E52, E58, G12, G21.
      PubDate: 2017-05-29
      DOI: 10.1093/qje/qjx019
      Issue No: Vol. 132, No. 4 (2017)
  • Who Becomes A Politician' *
    • Authors: Dal Bó E; Finan F, Folke O, et al.
      Pages: 1877 - 1914
      Abstract: AbstractCan a democracy attract competent leaders, while attaining broad representation' Economic models suggest that free-riding incentives and lower opportunity costs give the less competent a comparative advantage at entering political life. Moreover, if elites have more human capital, selecting on competence may lead to uneven representation. This article examines patterns of political selection among the universe of municipal politicians and national legislators in Sweden, using extraordinarily rich data on competence traits and social background for the entire population. We document four new facts that together characterize an “inclusive meritocracy.” First, politicians are on average significantly smarter and better leaders than the population they represent. Second, this positive selection is present even when conditioning on family (and hence social) background, suggesting that individual competence is key for selection. Third, the representation of social background, whether measured by parental earnings or occupational social class, is remarkably even. Fourth, there is at best a weak trade-off in selection between competence and social representation, mainly due to strong positive selection of politicians of low (parental) socioeconomic status. A broad implication of these facts is that it is possible for democracy to generate competent and socially representative leadership. JEL Codes: H1, H70, J45, P16.
      PubDate: 2017-06-01
      DOI: 10.1093/qje/qjx016
      Issue No: Vol. 132, No. 4 (2017)
  • Capital Allocation and Productivity in South Europe *
    • Authors: Gopinath G; Kalemli-Özcan Ş, Karabarbounis L, et al.
      Pages: 1915 - 1967
      Abstract: AbstractStarting in the early 1990s, countries in southern Europe experienced low productivity growth alongside declining real interest rates. We use data for manufacturing firms in Spain between 1999 and 2012 to document a significant increase in the dispersion of the return to capital across firms, a stable dispersion of the return to labor, and a significant increase in productivity losses from capital misallocation over time. We develop a model with size-dependent financial frictions that is consistent with important aspects of firms’ behavior in production and balance sheet data. We illustrate how the decline in the real interest rate, often attributed to the euro convergence process, leads to a significant decline in sectoral total factor productivity as capital inflows are misallocated toward firms that have higher net worth but are not necessarily more productive. We show that similar trends in dispersion and productivity losses are observed in Italy and Portugal but not in Germany, France, and Norway. JEL Codes: D24, E22, F41, O16, O47.
      PubDate: 2017-06-20
      DOI: 10.1093/qje/qjx024
      Issue No: Vol. 132, No. 4 (2017)
  • Reference-Dependent Job Search: Evidence from Hungary *
    • Authors: DellaVigna S; Lindner A, Reizer B, et al.
      Pages: 1969 - 2018
      Abstract: AbstractWe propose a model of job search with reference-dependent preferences, with loss aversion relative to recent income (the reference point). In this model, newly unemployed individuals search hard since consumption is below their reference point. Over time, though, they get used to lower income and thus reduce their search effort. In anticipation of a benefit cut, their search effort rises again, then declines once they get accustomed to the lower postcut benefit level. The model fits the typical pattern of exit from unemployment, even with no unobserved heterogeneity. To distinguish between this and other models, we use a unique reform in the unemployment insurance (UI) benefit path. In 2005, Hungary switched from a single-step UI system to a two-step system, with overall generosity unchanged. The system generated increased hazard rates in anticipation of, and especially following, benefit cuts in ways the standard model has a hard time explaining. We estimate a model with optimal consumption, endogenous search effort, and unobserved heterogeneity. The reference-dependent model fits the hazard rates substantially better than plausible versions of the standard model, including habit formation. Our estimates indicate a slow-adjusting reference point and substantial impatience, likely reflecting present-bias. JEL Codes: D03, J64, J65.
      PubDate: 2017-05-04
      DOI: 10.1093/qje/qjx015
      Issue No: Vol. 132, No. 4 (2017)
  • The Benefits of Forced Experimentation: Striking Evidence from the London
           Underground Network *
    • Authors: Larcom S; Rauch F, Willems T.
      Pages: 2019 - 2055
      Abstract: AbstractWe present evidence that a significant fraction of commuters on the London Underground do not travel on their optimal route. We show that a strike on the Underground, which forced many commuters to experiment with new routes, brought lasting changes in behavior. This effect is stronger for commuters who live in areas where the Underground map is more distorted, which points to the importance of informational imperfections. Information resulting from the strike improved network efficiency. Search costs alone are unlikely to explain the suboptimal behavior. JEL Codes: D83, L91, R41.
      PubDate: 2017-05-29
      DOI: 10.1093/qje/qjx020
      Issue No: Vol. 132, No. 4 (2017)
  • Erratum to “The Short-Term Impact of Unconditional Cash Transfers to the
           Poor: Experimental Evidence from Kenya”
    • Authors: Haushofer J; Shapiro J.
      Pages: 2057 - 2060
      Abstract: Tables I and II in Haushofer and Shapiro (2016) erroneously ca-lculated FWER-adjusted p-values using only 1,000 bootstrap iterations. The corrected tables report bootstrapped p-values with 10,000 iterations.
      PubDate: 2017-10-10
      DOI: 10.1093/qje/qjx039
      Issue No: Vol. 132, No. 4 (2017)
  • Erratum to “Leveraging Lotteries for School Value-Added: Testing and
    • Authors: Angrist JD; Hull PD, Pathak PA, et al.
      Pages: 2061 - 2062
      PubDate: 2017-10-10
      DOI: 10.1093/qje/qjx036
      Issue No: Vol. 132, No. 4 (2017)
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