AEA Journals

Strapped for Cash: The Role of Financial Constraints for Innovating Firms, Misallocation and Aggregate Productivity Growth (Forthcoming Article) - We analyze the impact of reduced financial constraints on innovating firms' performance and access to credit using a reform that allowed firms to use patents as collateral. We develop a theoretical framework to guide the analysis and quantify the aggregate impact of reduced financial constraints on misallocation and productivity by mapping data moments, reduced form results and model counterparts. Our empirical results suggest that reduced financial constraints led to an increase in firms' capital stock and bank debt. Parameterizing the model we find quantitatively large gains in output per worker in the sectors of the economy dominated by constrained firms.

Forthcoming in AEJ: Macroeconomics: "Strapped for Cash: The Role of Financial Constraints for Innovating Firms, Misallocation and Aggregate Productivity Growth" by Esther Ann Bøler, Andreas Moxnes, and Karen Helene Ulltveit-Moe.

The Perils of Overreaction (Forthcoming Article) - In order to study updating rules, we consider the problem of a malevolent principal screening an imperfectly Bayesian agent. We uncover a fundamental dichotomy between underreaction and overreaction to information. If, for some signal realization, the agent’s updating rule produces a posterior that lies outside the convex hull of the Bayesian posteriors induced by the signal structure, then she can be exploited by the principal without bound: her ex ante expected loss can be made arbitrarily large. In contrast, an agent who underreacts–whose posterior after each signal realization lies between the prior and the corresponding Bayesian posterior–cannot be exploited at all.

Forthcoming in AEJ: Microeconomics: "The Perils of Overreaction" by Konstantin von Beringe and Mark Whitmeyer.

Beyond Social Death: A Review Essay of Enslavement: Past and Present by Orlando Patterson (Forthcoming Article) - <i>Enslavement: Past and Present</i> by Orlando Patterson should be required reading for any economist or economic historian interested in long-run development and growth, race, inequality, political economy, or institutional development. Patterson synthesizes decades of his cross-disciplinary scholarship into an ambitious comparative framework to understand slavery, built on two main pillars: (i) slavery as “social death”, defined as a condition of total domination, natal alienation and dishonor, and (ii) a “bundle of rights” approach that permits systematic comparison across societies and periods. This review, after summarizing the book’s central arguments, offers three critiques—the limited applicability of social death to West and Central African slavery, insufficient attention to the Transatlantic Slave Trade, and the problematic extension to “modern slavery”—and proposes a research agenda focused on agency and resilience, diasporic identity, and reparations.

Forthcoming in the JEL: "Beyond Social Death: A Review Essay of Enslavement: Past and Present by Orlando Patterson" by Leonard Wantchekon.

Fiscal Transfers to Local Governments and the Distribution of Economic Activity (Forthcoming Article) - We study the economic effects of transfers to local governments using a reform of the Finnish municipal grant system as a source of exogenous variation. We find that higher grants lead to lower municipal taxes and fees, higher public spending and improved budget balance. These changes in local fiscal policy lead to an increase in private sector jobs. Our estimates imply a cost per job of e33,000. The increase in jobs is paired with a reduction in commuting to other municipalities. The effect on migration seems small, suggesting grants bring local benefits without drastically affecting where households choose to live.

Forthcoming in AEJ: Economic Policy: "Fiscal Transfers to Local Governments and the Distribution of Economic Activity" by Teemu Lyytikäinen, Sander Ramboer, and Max Toikka.

Land, Wealth, and Taxation (Forthcoming Article) - This paper examines the role of land in wealth dynamics and its consequences on efficiency and inequality. We focus on the interplay among agents’ bidding for location, mortgage market imperfections, and inheritance in a model in which agents leave to their heirs financial bequests and their housing wealth. The borrowing constraint generates a housing return premium and spatial wealth sorting, which translate into persistent wealth inequality. Since altruism and the borrowing constraint distort land price formation, we show that taxing land rent transmitted between generations is optimal. Land taxation cannot be disconnected from taxation on intergenerational wealth transfers.

Forthcoming in AEJ: Microeconomics: "Land, Wealth, and Taxation" by Roberto Brunetti, Carl Gaigné, and Fabien Moizeau.

Macroeconomic Effects of ‘Free’ Secondary Schooling in the Developing World (Forthcoming Article) - This paper studies the macroeconomic effects of free secondary schooling in the developing world. Our analysis is based on an OLG model of human capital accumulation that we estimate to match experimental evidence on the effects of secondary school scholarships. The model predicts that nationwide free secondary schooling leads to a modest gain in GDP per capita. The human capital gains from expanded education access are offset by lost income during schooling years and dampened by negative selection of new students entering secondary school. An alternative policy that spends the same resources improving school quality has significantly larger effects.

Forthcoming in AEJ: Macroeconomics: "Macroeconomic Effects of ‘Free’ Secondary Schooling in the Developing World" by Junichi Fujimoto, David Lagakos, and Mitchell VanVuren.

University as a Melting Pot: Long-term Effects of Internationalization (Forthcoming Article) - This paper provides the first evidence on the impact of exposure to international students on the long-term outcomes of native students. I combine unique survey and administrative data from the Netherlands covering one million students across three decades and employ an across-cohort design. I find that exposure to international students leads natives to (i) form social ties with non-natives, (ii) hold more positive attitudes towards migration and learning about other cultures, and (iii) seek opportunities abroad. Notably, I find precisely estimated zero effects on employment, income, entrepreneurship, and the share of international co-workers up to 25 years after university entry.

Forthcoming in AEJ: Applied Economics: "University as a Melting Pot: Long-term Effects of Internationalization" by Stanislav Avdeev.

Globalization, Capital Taxation, and Development: Evidence from a Macro-Historical Database (Forthcoming Article) - This paper builds and analyzes a new global macro-historical database of effective tax rates on capital and labor in 154 countries. We establish a new stylized fact: while effective capital tax rates fell in developed countries between 1965 and 2018, they rose in developing countries since 1990. Multiple research designs at the country, sector and firm-level suggest that trade openness contributed to this rise, by increasing the share of output produced in corporations and larger firms, where effective capital taxation is higher. In contrast to a common view, globalization appears in many countries to have supported governments’ ability to tax capital.

Forthcoming in AEJ: Applied Economics: "Globalization, Capital Taxation, and Development: Evidence from a Macro-Historical Database" by Pierre Bachas, Matthew Fisher-Post, Anders Jensen, and Gabriel Zucman.

Price Setting and Volatility: Evidence from Oil Price Volatility Shocks (Forthcoming Article) - Do changes in aggregate volatility alter the impulse response of output to monetary policy? I use plausibly exogenous oil price volatility shocks and exploit heterogene- ity in oil usage across industries to show that PPI item level price changes become less frequent and more disperse when volatility is high. This implies aggregate price flexibility does not increase when aggregate volatility is high. I construct a state- dependent pricing model with random menu costs to interpret the findings. Match- ing the new empirical facts, the model shows that increases in aggregate volatility do not substantially reduce monetary policy effectiveness.

Forthcoming in AEJ: Macroeconomics: "Price Setting and Volatility: Evidence from Oil Price Volatility Shocks" by Matthew Klepacz.

Cognitive Ability and Perceived Disagreement in Learning (Forthcoming Article) - Do agents believe they agree more with others over time? This paper explores how individuals perceive the belief updating behavior of others and the resulting disagreement in a sequential experiment with public information. We uncover a persistent gap in the perception of disagreement as a function of cognitive ability. Higher cognitive ability correlates with less perceived disagreement, although the average subject underestimates the extent of actual disagreement. Information about a partner’s cognitive ability only impacts perceived disagreement when the partner has a low test score. Our findings highlight the roles of overconfidence and cognitive projection in shaping these perceptions.

Forthcoming in AEJ: Microeconomics: "Cognitive Ability and Perceived Disagreement in Learning" by Piotr Evdokimov and Umberto Garfagnini.

The Economics of Age at School Entry: Insights from Evidence and Methods (Forthcoming Article) - This article reviews the growing literature on age at school entry and its effects over the life course. Age at school entry affects a broad range of outcomes, including education, labor-market performance, health, social relationships, and family formation. We synthesize the evidence using a conceptual framework that distinguishes four empirically intertwined components of age at school entry: starting age, age at outcome, relative age, and time in school. Within this framework, we highlight six key channels through which age at school entry operates. While the effects of age at school entry are often substantial and persistent, many studies estimate bundled impacts without isolating specific components or directly measuring underlying mechanisms. We explain how different research designs capture distinct combinations of these components. We also highlight how institutional heterogeneity and behavioral responses can complicate the interpretation of results. We conclude by outlining directions for future research and policy design.

Forthcoming in the JEL: "The Economics of Age at School Entry: Insights from Evidence and Methods" by Mariagrazia Cavallo, Elizabeth Dhuey, Luca Fumarco, Levi Halewyck, and Simon ter Meulen.

Leaning Against the Global Financial Cycle (Forthcoming Article) - We investigate the impact of institutional quality on shielding emerging economies from the Global Financial Cycle. Our findings indicate that countries with a higher rule of law, characterized by superior contract enforcement and more robust protection of property rights, experience a less severe tightening of domestic financial and macroeconomic conditions when faced with adverse global financial shocks. We explain this outcome through a simplified model that incorporates financial frictions, showing how strong institutions and effective governance alleviate collateral constraints and mitigate the effects of global financial pressures on the domestic economy.

Forthcoming in AEJ: Macroeconomics: "Leaning Against the Global Financial Cycle" by Andrea Ferrero, Maurizio Habib, Livio Stracca, and Fabrizio Venditti.

Electoral Campaign Attacks: Theory and Evidence (Forthcoming Article) - This paper studies the determinants of electoral campaign attacks. We first propose a model to examine the main factors that influence candidates’ decisions to attack. Our theoretical analysis yields a number of predictions which we test using information from “right of reply” lawsuits filed in Brazil. Our empirical analysis exploits a regression discontinuity design based on virtual ties between 2nd and 3rd place candidates to show that candidates with an electoral advantage are more likely to receive an attack. We then exploit another discontinuity to show that the patterns of campaign attacks differ significantly under single and dual ballot plurality systems.

Forthcoming in AEJ: Microeconomics: "Electoral Campaign Attacks: Theory and Evidence" by Marcos Y. Nakaguma and Danilo Souza.

Curbing the influence of criminals on public officials Better pay for politicians is associated with less corruption in public procurement.

Higher wages reduced corrupt procurement practices among Italian municipal executives, but increased the likelihood that those officials were subjected to criminal attacks, say researchers at Università Roma Tre and NYU. #econsky www.aeaweb.org/research/cha...

Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands (Forthcoming Article) - We introduce an empirical framework for valuing markets in environmental offsets. Using newly-collected data on wetland conservation and offsets, we apply this framework to evaluate a set of decentralized markets in Florida, where land developers purchase offsets from long-lived producers who restore wetlands over time. We find that offsets led to substantial private gains from trade, creating $2.4 billion of net surplus from 1995–2020 relative to direct conservation. Offset trading also generated new hydrological externalities. A locally differentiated Pigouvian tax would have prevented $1.6 billion of new flood damage while preserving more than two-thirds of the private gains from trade.

Forthcoming in the AER: "Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands" by Daniel Aronoff and Will Rafey.

American Economic Review Vol. 116 No. 3 March 2026

The March 2026 issue of the American Economic Review (116, 3) is now available online at

The Means of Prediction: How AI Really Works (and Who Benefits) by Maximilian Kasy (Forthcoming Article)

Forthcoming book review in the JEL: "The Means of Prediction: How AI Really Works (and Who Benefits) by Maximilian Kasy" by David Autor.

Labor Share, Markups, and Input-Output Linkages – Evidence from the U.S. National Accounts (Forthcoming Article) - This paper investigates declining U.S. labor share by employing a multisector model that incorporates the input-output structure of the economy. Analyzing data from 1957 to 2016, we find that increasing markups account for the majority of the decline. Input-output linkages significantly amplified a modest increase in sectoral markups. Capital deepening had large direct effects in the goods sector but structural change offset this effect by reallocating output from the goods to the services sector. In contrast, markups increased in both sectors so structural change does not have an offsetting effect.

Forthcoming in AEJ: Macroeconomics: "Labor Share, Markups, and Input-Output Linkages – Evidence from the U.S. National Accounts" by Benjamin Bridgman and Berthold Herrendorf.

Household-Level Responses to the European Energy Crisis (Forthcoming Article) - Cost-of-living shocks can have large and unequal effects, but causal evidence on households’ adaptive responses is scarce. Using Finnish administrative microdata from the 2022 energy crisis, we exploit variation in electricity contract expirations to identify behavioral responses in electricity use, labor earnings, financial distress, and residual consumption and savings. We find notable heterogeneity in responses that shape the final incidence: high-income households primarily reduced electricity consumption, while low-income households reduced consumption less, responding instead through increased labor supply, more payment defaults, and cutbacks in spending and savings. Longer anticipation softens but does not eliminate these impacts.

Forthcoming in AER: Insights: "Household-Level Responses to the European Energy Crisis" by Lassi Ahlvik, Tuomas Kaariaho, Matti Liski, and Iivo Vehviläinen.

Attracting and Retaining Highly Effective Educators in Hard-to-Staff Schools (Forthcoming Article) - Attracting and retaining effective teachers in high-poverty schools remains a persistent challenge. We evaluate the impact of an initiative that offered substantial performance-based compensation to highly effective teachers in the lowest-achieving schools. We find that the program led to dramatic improvements in achievement, nearly closing the gap between the targeted schools and the district average. When the program was later reversed for some campuses, effective teachers departed at high rates, resulting in an immediate decline in student achievement. The results underscore the potential for effectiveness-based compensating differentials to attract and retain effective teachers in disadvantaged schools.

Forthcoming in AEJ: Economic Policy: "Attracting and Retaining Highly Effective Educators in Hard-to-Staff Schools" by Andrew Morgan, Minh Nguyen, Eric Hanushek, Ben Ost, and Steven Rivkin.

Environmental Subsidies to Mitigate Net-Zero Transition Costs (Forthcoming Article) - Imperfect competition within the pollution abatement equipment sector may hinder the Paris Agreement’s goals. We show that carbon tax–funded environmental subsidies can stimulate firm entry, enhance competition, and lower abatement costs for businesses. Using a quantitative macro-climate model with an endogenous market structure for abatement equipment, we estimate that optimally allocating subsidies (60% to startups and 40% to existing companies) could enhance efficiency, generating annual global GDP savings of $2.5 to $3.1 trillion by 2060.

Forthcoming in AEJ: Macroeconomics: "Environmental Subsidies to Mitigate Net-Zero Transition Costs" by Eric Jondeau, Gregory Levieuge, Jean-Guillaume Sahuc, and Gauthier Vermandel.

Journal of Economic Literature Vol. 64 No. 1 March 2026

The March 2026 issue of the Journal of Economic Literature (64, 1) is now available online at

IT investment and the earnings distribution The geographic dimension of wage polarization.

Information technology has not affected all places equally. Local housing prices play an important role in determining which jobs disappear and where, say researchers at @upf.edu, @edinburgh-uni.bsky.social, and the Federal Reserve Bank of Cleveland #econsky www.aeaweb.org/research/it-...

The Lost Marie Curies and Foregone Economic Growth (Forthcoming Article) - Women made up only 15% of U.S. inventors in 2024. Assuming no intrinsic gender differences in inventive potential, the scarcity of women in research reveals that the U.S. is missing out on some of its brightest minds. How costly is this talent misallocation for aggregate productivity? I develop a model of semi-endogenous growth in which individuals with heterogeneous talent choose between research and production careers. However, several barriers deter women from pursuing their comparative advantage. Lifting those barriers would increase U.S. income per person by 14.1% in the long run, compared with just 1.5% from a 30% R&D subsidy alone.

Forthcoming in AEJ: Macroeconomics: "The Lost Marie Curies and Foregone Economic Growth" by Jean-Félix Brouillette.

American Economic Review: Insights Vol. 8 No. 1 March 2026

The March 2026 issue of AER: Insights (8, 1) is now available online at aeaweb.org/issues/837

Diversion Risk, Markups, and the Financing Cost Advantage of Trade Credit (Forthcoming Article) - Trade credit is a key source of short-term finance. This paper develops a model where trade credit reduces borrowing from banks. This reduction gives rise to a financing cost advantage of trade credit that increases in the product of markups and borrowing costs. Chilean export data confirm this prediction. A one-standard-deviation rise in upstream markups increases trade credit by 9 days. The intensive margin is responsible for about 60 percent of this effect, which strengthens with destination-country borrowing costs. We estimate that trade credit allows U.S. firms to reduce formal borrowing by $1.4 trillion, generating annual savings of $39 billion.

Forthcoming in AEJ: Macroeconomics: "Diversion Risk, Markups, and the Financing Cost Advantage of Trade Credit" by Alvaro Garcia-Marin, Santiago Justel, and Tim Schmidt-Eisenlohr.

Why Is Fertility So Low in High-Income Countries? (Forthcoming Article) - We consider why fertility has fallen in recent decades in almost all high-income countries. We begin by documenting declining total fertility and rising childlessness across cohorts, highlighting the need to focus on cohort versus period-specific fertility rates. With this motivation, we propose a conceptual model of fertility determination that augments the standard Becker model with an explicit role for social norms and cohort-specific contextual factors, including broad social and economic influences and an expanded set of consumption and lifestyle options. We posit that these forces have led to “shifting priorities,” reducing the centrality of parenthood. We then review existing empirical evidence –and conclude that the decline in fertility likely reflects a complex mix of changing norms around work, parenting, gender roles, and leisure consistent with our cohort-based conceptual framework. We conclude with suggestions for future research and a brief discussion of policy implications.

Forthcoming in the JEL: "Why Is Fertility So Low in High-Income Countries?" by Melissa S. Kearney and Phillip B. Levine.

Increasing Inventories: The Role of Delivery Times (Forthcoming Article) - Inventories mitigate the risk of global sourcing. I present new evidence of the rise in U.S. manufacturing inventories after 2005, reversing a declining trend that lasted for decades. I examine this trend in a model of delivery times and inventories. The rise in global sourcing lead to longer and more volatile delivery times, which increase a firm’s exposure to risk. Thus, firms hold more inventories. I find the rise in global sourcing accounts for 86% of the rise in inventories. Further, a globalized economy that uses more foreign inputs trades-off the increase in output at the cost of increased macroeconomic volatility.

Forthcoming in AEJ: Macroeconomics: "Increasing Inventories: The Role of Delivery Times" by Maria-Jose Carreras-Valle.

The Dynamics of Evasion: The Price Cap on Russian Oil Exports and the Amassing of the Shadow Fleet (Forthcoming Article) - To reduce Russia’s funding for its Ukraine invasion, Western governments imposed, after a delay, a price ceiling on Russian seaborne oil exports utilizing Western services. To evade that ceiling, Russia developed a “shadow fleet” using no such services. We simulate a calibrated model driven by this fleet’s expansion to assess various sanctions. Mainly, sanctions—from a price ceiling to its extreme service ban version—significantly reduce the present value of Russia’s profits. However, tighter price caps will not necessarily harm Russia if they raise the world price. Shortening the delay between sanctions announcement and implementation can harm Russia more.

Forthcoming in AEJ: Economic Policy: "The Dynamics of Evasion: The Price Cap on Russian Oil Exports and the Amassing of the Shadow Fleet" by Diego S. Cardoso, Stephen W. Salant, and Julien Daubanes.

The Attention–Information Tradeoff (Forthcoming Article) - How does information transmission change when it requires attracting the attention of receivers? This paper combines an experiment that varies freelance professionals’ incentives to attract attention about scientific findings, with several online experiments that exogenously expose receivers to the content created. Attention incentives lead to significantly less information being transmitted, but not more factually inaccurate content. These incentives increase information demand and the knowledge of interested receivers. However, among the majority of receivers who do not demand more information, attention incentives lower knowledge and increase biases in beliefs, revealing that missing information can be a channel through which misperceptions arise.

Forthcoming in the AER: "The Attention–Information Tradeoff" by Marta Serra-Garcia.