Journal of Political Economy

Thomas J. Sargent · Neil Wallace

This paper studies, within a simple "ad hoc" macroeconomic model not derived from individuals' and firms' optimizing behavior but built to resemble the macroeconometric models of the time, how the …

Jeremy Bulow · Kenneth Rogoff

This 1989 Journal of Political Economy paper by Jeremy Bulow and Kenneth Rogoff models sovereign debt renegotiation as an ongoing bilateral bargaining process (following Rubinstein's …

Robert J. Barro · David B. Gordon

Barro and Gordon build a positive (not merely normative) theory of monetary policy in a natural-rate model, aiming to reconcile two stylized facts -- inflation and money growth that are persistently …

Gary S. Becker · Kevin M. Murphy

Becker and Murphy develop a theory in which addiction -- even strong addiction to alcohol, cigarettes, or heroin -- is the outcome of a consistent, forward-looking plan to maximize utility over time, …

Ricardo Lagos · Randall Wright

This 2005 *Journal of Political Economy* paper by Ricardo Lagos and Randall Wright builds a monetary search model in which each period alternates between a decentralized market with anonymous …

Charles Engel

This 1999 Journal of Political Economy paper (NBER Working Paper 5394, 1995) by Charles Engel asks how much of the historical variation in the U.S. real exchange rate against other high-income …

Peter A. Diamond

This 1982 Journal of Political Economy paper by Peter Diamond introduces a third source of macroeconomic unemployment, distinct from price/wage misperceptions or sluggish nominal adjustment: the …

Paul A. Samuelson

This 1958 Journal of Political Economy paper by Paul Samuelson builds a deliberately stripped-down model of a world in which goods cannot be stored or invested -- nothing "keeps" -- so people can only …

Elhanan Helpman

This 1981 Journal of Political Economy paper by Elhanan Helpman compares three exchange-rate regimes -- a float, a one-sided peg, and a cooperative peg -- in a two-country, perfect-foresight model …

Robert J. Barro

This 1974 Journal of Political Economy paper by Robert Barro asks whether an increase in government bonds raises households' perceived net wealth, and argues that within an overlapping-generations …

Jess Benhabib · Stephanie Schmitt-Grohé · Martín Uribe

Because a Taylor-type interest-rate rule must be consistent with the zero nominal-interest-rate bound, it always admits a second, unintended steady state with low or negative inflation alongside the …

Douglas W. Diamond · Philip H. Dybvig

A three-period model in which households face a privately observed, uninsurable risk of needing to consume early, and where a demand deposit contract lets banks share that risk better than any market …

François R. Velde

Velde asks what happens to prices, wages, and output when the nominal money supply is cut literally overnight, and finds a real-world natural experiment in 1720s France, where the government …

John Y. Campbell · Robert J. Shiller

This paper develops a way to test "present value" models -- in which a variable Y (a long rate, a stock price) equals a constant times the discounted present value of expected future values of another …

Ayşe İmrohoroğlu

Imrohoroglu asks whether the small welfare cost of business cycles found by Lucas (1987) -- who assumed individuals can perfectly insure against idiosyncratic risk -- still holds once that …

Victor Chernozhukov · Kaspar Wüthrich · Yinchu Zhu

Chernozhukov, Wüthrich, and Zhu propose a debiased synthetic control (SC) estimator and an accompanying self-normalized t-test for making inferences on the average treatment effect on the treated …

Olivier J. Blanchard

This paper builds a tractable model of an economy populated by finitely lived agents -- each facing a constant instantaneous probability of death p, with new cohorts continuously born -- and uses it …

John H. Cochrane

Cochrane argues that the standard new-Keynesian account of how a Taylor rule pins down inflation is incomplete -- it works only by assuming the government will follow policies that amount to a threat …

Paul M. Romer

This 1990 Journal of Political Economy paper by Paul Romer models long-run growth as driven by technological change that arises from intentional research investment by profit-maximizing firms, …

Thomas R Covert · Ryan Kellogg

Covert and Kellogg study policies that aim to "keep carbon in the ground" by blocking fossil fuel infrastructure investment, with the Dakota Access Pipeline (DAPL) as their empirical application. DAPL …

Maurice Obstfeld · Kenneth Rogoff

This 1995 Journal of Political Economy paper by Maurice Obstfeld and Kenneth Rogoff builds the foundational "Redux" two-country dynamic general-equilibrium model that bridges the intertemporal …

Ralph S.J. Koijen · Motohiro Yogo

The paper develops an asset demand system to analyze, jointly and across all countries, how international portfolio holdings and flows, exchange rates, short-term rates, long-term yields, and equity …

Zefeng Chen · Zhengyang Jiang · Hanno Lustig · Stijn Van Nieuwerburgh · Mindy Z. Xiaolan

This paper studies three centuries of U.K. fiscal history to understand the fiscal implications of safe asset supplier status — what the authors call "exorbitant privilege" — and how it can be gained …

Rudiger Dornbusch

This 1976 Journal of Political Economy paper by Rudiger Dornbusch builds a small open-economy model in which capital is perfectly mobile and asset markets clear instantly, but the price of domestic …

Priit Jeenas

Contrary to treating corporate cash as simply negative debt, this paper shows that firms' liquid-asset holdings, not their leverage, robustly predict which firms cut investment most after a monetary …

Tan Gan · Nicholas Wu

This paper studies a dynamic mechanism design problem in which an informed seller sells an experience good to a skeptical buyer who learns about the product through consumption. The central question …

Valerie A. Ramey · Sarah Zubairy

Using a newly constructed quarterly US data set spanning 1889–2015 — built specifically to include the large wars and deep recessions that the post-WWII sample most of the literature relies on simply …

Elena Capatina · Michael Keane

Capatina and Keane build and calibrate a life-cycle model of labor supply and savings for U.S. men that incorporates health shocks, endogenous human capital accumulation via learning-by-doing, …

Aimé Bierdel · Andres Drenik · Juan Herreño · Pablo Ottonello

The paper develops a quantitative capital-accumulation model in which capital trades in illiquid markets with asymmetric information — sellers know the quality of their capital but buyers do not. It …

Per Krusell · Anthony A. Smith, Jr.

In a calibrated stochastic growth model where a continuum of households face partially uninsurable employment risk and can self-insure only by holding aggregate capital, the macroeconomic aggregates …

Paul M. Romer

This 1986 Journal of Political Economy paper by Paul Romer builds a fully specified competitive-equilibrium model of long-run growth in which knowledge is an input to production with increasing …

Matthias Doepke · Martin Schneider

Using Flow-of-Funds and Survey-of-Consumer-Finances data to reconstruct market-value nominal asset and liability positions -- including their maturity structure -- across U.S. sectors and household …

Mikkel Plagborg-Møller · Christian K. Wolf

This 2022 Journal of Political Economy paper by Mikkel Plagborg-Møller and Christian K. Wolf asks what an external instrument (a proxy correlated with one structural shock and uncorrelated with the …

Matteo Maggiori · Brent Neiman · Jesse Schreger

Using a new security-level dataset covering $32 trillion in global investment positions, this paper establishes that the currency a bond is denominated in -- not the nationality of its issuer -- is …

David K. Backus · Patrick J. Kehoe · Finn E. Kydland

Backus, Kehoe, and Kydland build a two-country extension of Kydland and Prescott's (1982) closed-economy real-business-cycle model -- with complete international asset markets, country-specific …

Ariel Burstein · Martin Eichenbaum · Sergio Rebelo

This paper argues, using data from five large devaluation episodes (Argentina 2001, Brazil 1999, Korea 1997, Mexico 1994, Thailand 1997), that the large post-devaluation fall in the real exchange rate …

William R. Zame · Bertil Tungodden · Erik Ø. Sørensen · Shachar Kariv · Alexander W. Cappelen

This paper asks whether an individual's attitude toward risk in the personal domain (choices affecting only oneself) can be linked to that same individual's attitude toward risk in the social domain …

Thomas J. Sargent · François R. Velde

Interpreting the French Revolution through the lens of government-budget-constraint theory, this paper traces how a pre-1789 fiscal crisis, the assignat's evolution from tax-backed money into fiat …

Guido Menzio

Across macroeconomics, market power is almost always modelled with the Dixit–Stiglitz (1977) monopolistic-competition framework, in which a seller's markup is pinned down by how substitutable buyers …

Michael T. Belongia

This 1996 Journal of Political Economy paper by Michael T. Belongia asks a narrow but consequential question: do the qualitative conclusions of recent monetary economics depend on whether money is …

Kelli Marquardt

This paper develops and estimates a structural model of ADHD diagnosis to decompose the mechanisms driving the observed 2.3:1 male-to-female diagnostic difference in the United States. The research …

Lars E. O. Svensson

Svensson derives the demand for money and the pricing of nominal and real interest rates and other assets in a general-equilibrium, pure-exchange monetary economy by treating money symmetrically with …

Fernando Alvarez · Andrew Atkeson · Patrick J. Kehoe

Alvarez, Atkeson, and Kehoe build a cash-in-advance model in which households face a fixed real cost to transfer funds between a goods market and an asset market, so that in any period only a fraction …

Robert E. Lucas, Jr.

Lucas's 1995 Nobel Prize lecture asks why changes in the quantity of money seem, from David Hume onward, to be both neutral "units changes" in the long run and yet a source of real stimulus or …

J. Bradford De Long · Andrei Shleifer · Lawrence H. Summers · Robert J. Waldmann

This paper builds a simple overlapping-generations model of an asset market with two types of traders -- "noise traders," who hold erroneous, randomly-varying beliefs about an asset's expected return, …

Lawrence J. Christiano · Martin Eichenbaum · Charles L. Evans

This 2005 Journal of Political Economy paper by Christiano, Eichenbaum, and Evans (CEE) builds and estimates a general-equilibrium model to answer a specific question: what combination of frictions …

Nobuhiro Kiyotaki · Randall Wright

This 1989 *Journal of Political Economy* paper by Nobuhiro Kiyotaki and Randall Wright builds a general-equilibrium random-matching model in which the identity of "money" is determined endogenously, …

Anmol Bhandari · Tobey Kass · Thomas J. May · Ellen R. McGrattan · Evan Schulz

This paper uses a novel longitudinal administrative dataset drawn from U.S. Internal Revenue Service (IRS) and Social Security Administration (SSA) records to characterize income dynamics and the …

Daron Acemoglu · Daniel Huttenlocher · Asuman Ozdaglar · James Siderius

Acemoglu, Huttenlocher, Ozdaglar, and Siderius develop a two-sided platform model to study the welfare consequences of digital advertising as an online business model. The platform intermediates …

S. Rao Aiyagari

Against Chamley's (1986) and Lucas's (1990) result that the optimal long-run capital income tax is zero, this paper shows that in a Bewley-type incomplete-markets economy with uninsured idiosyncratic …

François Le Grand · Xavier Ragot

The Chamley-Judd result (1986) states that the optimal long-run capital income tax rate is zero in representative-agent models. This paper shows that introducing heterogeneous agents — specifically, …

Karun Adusumilli

This paper addresses a practical gap in the inference literature for sequential and adaptive experiments: while the design of such experiments has been studied extensively, there is little theory …

Michela Maria Tincani

This paper investigates the mechanisms behind peer effects in the classroom using exogenous variation in study disruptions generated by the 2010 Maule mega-earthquake in Chile (magnitude 8.8, the …

Craig Burnside · Martin Eichenbaum · Sergio Rebelo

Argues that the 1997 Asian currency crisis was driven by large prospective government deficits -- the anticipated future fiscal cost of bailing out failing banking systems -- rather than by the …

Ian Schofield Ball · Deniz Kattwinkel

Ball and Kattwinkel study quota mechanisms — linking mechanisms that impose aggregate constraints on agents' reports across multiple decision problems — and provide the first theoretical analysis …

Johnny Tang

This paper quantitatively assesses the consequences of jurisdictional competition in the US life insurance industry, an $8 trillion market. The central question is whether competition between state …

Boaz Abramson · Stijn Van Nieuwerburgh

Abramson and Van Nieuwerburgh study Rent Guarantee Insurance (RGI), a product in which an insurer pays the landlord on behalf of a tenant who defaults on rent due to a negative income or health …

Susanto Basu · John G. Fernald

This 1997 *Journal of Political Economy* paper (circulated as Federal Reserve International Finance Discussion Paper 546, March 1995) asks how large deviations from constant returns to scale and …

Victor Gay · Paula E. Gobbi · Marc Goñi

Gay, Gobbi, and Goñi test Le Play's (1875) hypothesis that the French Revolution contributed to France's early fertility decline by abolishing impartible inheritance. In 1793, a series of decrees …

Timothy B. Armstrong · Martin Weidner · Andrei Zeleneev

This paper develops new estimation and inference tools for the coefficient on a covariate of interest in large panel regressions whose unobserved heterogeneity has an interactive fixed effects …

Finn E. Kydland · Edward C. Prescott

This 1977 Journal of Political Economy paper by Finn Kydland and Edward Prescott argues that optimal control theory -- the standard technique proposed for macroeconomic stabilization policy -- is not …

Joao Ayres · Gaston Navarro · Juan Pablo Nicolini · Pedro Teles

This paper asks whether sovereign debt crises can be self-fulfilling — triggered by lenders' expectations of default rather than by weak fiscal fundamentals alone — and whether such crises are …

Duncan Webb

This paper examines how two types of communication about a minority group affect discriminatory behavior: (i) horizontal communication between majority-group members, and (ii) top-down communication …

Mark Bils · Peter J. Klenow

Using unpublished BLS microdata behind the CPI for 1995-1997 -- about 350 categories covering roughly 70% of consumer spending -- Bils and Klenow find that individual retail prices change much more …

Robert E. Hall

This paper shows that if consumers maximize expected lifetime utility subject to an intertemporal budget constraint under uncertain future earnings -- the standard life cycle-permanent income model -- …

Snehal Banerjee · Jesse Davis · Naveen Gondhi

Survey forecasts depart from rational expectations in ways that look contradictory: consensus forecasts under-react to news, individual forecasts of macroeconomic variables tend to over-react, and …

David B. Gordon · Eric M. Leeper

This 1994 Journal of Political Economy paper by David B. Gordon and Eric M.

Ulrika Ahrsjö · Costas Meghir · Mårten Palme · Marieke Schnabel

This paper studies the intergenerational effects of education policy on crime, asking whether a compulsory schooling reform that reduced crime among those directly exposed also reduced crime among …

Lars Ljungqvist · Thomas J. Sargent

This 1998 Journal of Political Economy paper by Lars Ljungqvist and Thomas Sargent argues that the persistently high unemployment that struck European welfare states from the 1980s onward reflects not …

David A. Green · Ben M. Sand · Iain G. Snoddy · Jeanne Tschopp

This paper estimates the impact of unions on nonunion wage setting in the United States over the period 1980–2010, distinguishing two channels through which unions affect nonunion wages: (1) a …

Adrien Auclert · Matthew Rognlie · Ludwig Straub

This paper derives an "intertemporal Keynesian cross" showing that intertemporal marginal propensities to consume (iMPCs) are sufficient statistics for the output response of fiscal policy in …

Milton Friedman

This 1961 Journal of Political Economy paper is Milton Friedman's reply to J. M.

Diego Daruich

This paper embeds early childhood development (ECD) investment into a general-equilibrium (GE), heterogeneous-agent, overlapping-generations model calibrated to U.S. data in order to quantify the …

Erik G. Hurst · Patrick Kehoe · Elena Pastorino · Thomas Winberry

This paper builds a dynamic macroeconomic model with rich worker heterogeneity, firm monopsony power and putty-clay adjustment frictions in order to trace the time path of the effects of the federal …

Fatih Guvenen · Serdar Ozkan · Jae Song

This 2014 *Journal of Political Economy* paper (circulated as Federal Reserve Bank of Minneapolis Staff Report 476, December 2012; the Minneapolis Fed's own hosting of this PDF is currently …

Andreas I. Mueller · Johannes Spinnewijn

This paper studies the sources of long-term unemployment (LTU, defined as failing to find a job within six months) using administrative data on the universe of unemployment spells in Sweden from 1992 …

Gary D. Hansen · Ayşe İmrohoroğlu

Hansen and Imrohoroglu build a dynamic general-equilibrium economy -- deliberately designed to give unemployment insurance (UI) the most favorable possible conditions -- to compute the potential …

Robert B. Barsky · Jeffrey A. Miron

This 1989 Journal of Political Economy paper by Robert Barsky and Jeffrey Miron argues that the seasonal fluctuations ordinarily filtered out of macroeconomic data before business-cycle analysis …

Sebastian Di Tella · Benjamin Hébert · Pablo Kurlat · Qitong Wang

This paper proposes and measures the zero-beta rate — the expected return on a portfolio of stocks with zero market beta, constructed to be orthogonal to the SDF innovations spanned by standard …

Andrés Rodríguez-Clare · Mauricio Ulate · José P. Vásquez

Standard international trade models assume perfectly flexible prices and full employment. This paper introduces nominal rigidities (downward wage rigidity) into a quantitative trade model and asks how …

Jason Choi · Rishabh Kirpalani · Diego J. Perez

This paper asks whether the U.S. government exploits its market power as the dominant global supplier of safe assets when setting the quantity of public debt, and quantifies the macroeconomic …

Christian Hellwig · Nicolas Werquin

Two of the most influential results in optimal tax theory — Saez's (2001) formula for the top income tax rate and Atkinson and Stiglitz's (1976) case for not taxing savings — are usually invoked …

Lawrence Christiano · Martin Eichenbaum · Sergio Rebelo

The government-spending multiplier can be much larger than one when the zero lower bound on the nominal interest rate binds, and the larger the fraction of the spending that occurs while the nominal …

Greg Buchak · Gregor Matvos · Tomasz Piskorski · Amit Seru

This paper examines frictions in dealer intermediation in durable consumer goods markets, using iBuyers — technology-driven real estate companies such as Opendoor and Offerpad — as a lens. The central …