顶级期刊目录 | Econometrica 2024.9

1.Can Deficits Finance Themselves?

2.On the Structure of Informationally Robust Optimal Mechanisms

3.The Rise of Fiscal Capacity: Administration and State Consolidation in the Holy Roman Empire

4.Historical Self-Governance and Norms of Cooperation

5.Exact Bias Correction for Linear Adjustment of Randomized Controlled Trials

6.Robust Real Rate Rules

7.Random Votes to Parties and Policies in Coalition Governments

8.Propagation and Amplification of Local Productivity Spillovers

9.Endogenous Production Networks Under Supply Chain Uncertainty

10.Spatial Unit Roots and Spurious Regression

11.Lifestyle Behaviors and Wealth-Health Gaps in Germany

12.Contractual Chains

   Authors  

George-Marios Angeletos, Chen Lian, Christian K. Wolf 

   Abstract   

We ask how fiscal deficits are financed in environments with two key features: (i) nominal rigidity, and (ii) a violation of Ricardian equivalence due to finite lives or liquidity constraints. In such environments, deficits can contribute to their own financing through two channels: a boom in real economic activity, which expands the tax base; and a surge in inflation, which erodes the real value of nominal government debt. Our main theoretical result establishes that this mechanism becomes more potent as fiscal adjustment is delayed, leading to full self-financing in the limit: if the monetary authority does not lean too heavily against the fiscal stimulus, then the government can run a deficit today, refrain from tax hikes or spending cuts in the future, and still see its debt converge back to its initial level. We further demonstrate that a significant degree of self-financing is achievable when the theory is disciplined by empirical evidence on marginal propensities to consume, nominal rigidities, the monetary policy reaction, and the speed of fiscal adjustment.

Authors  

Benjamin Brooks, Songzi Du

   Abstract   

We study the design of optimal mechanisms when the designer is uncertain both about the form of information held by the agents and also about which equilibrium will be played. The guarantee of a mechanism is its worst performance across all information structures and equilibria. The potential of an information structure is its best performance across all mechanisms and equilibria. We formulate a pair of linear programs, one of which is a lower bound on the maximum guarantee across all mechanisms, and the other of which is an upper bound on the minimum potential across all information structures. In applications to public expenditure, bilateral trade, and optimal auctions, we use the bounding programs to characterize guarantee-maximizing mechanisms and potential-minimizing information structures and show that the max guarantee is equal to the min potential.

   Authors  

Davide Cantoni, Cathrin Mohr, Matthias Weigand

   Abstract   

This paper studies the role of fiscal capacity in European state consolidation. Our analysis is organized around novel data on the territories and cities of the Holy Roman Empire in the early modern period. Territories implementing an early fiscal reform were more likely to survive, increased in size, and achieved a more compact extent. We provide evidence for the causal interpretation of these results and show key mechanisms: revenues, military investments, and marriage success. The imposition of Imperial taxes, quasi-random in timing and size, increased the benefits of an efficient tax administration on the side of rulers, driving the implementation of fiscal centralization. Within territories, Chambers became the dominant administrative institution, tilting the consolidating states toward absolutism.

   Authors  

Devesh Rustagi

   Abstract   

Does self-governance, a hallmark of democratic societies, foster norms of generalized cooperation? Does this effect persist, and if so, why? I investigate these questions using a natural experiment in Switzerland. In the Middle Ages, the absence of an heir resulted in the extinction of a prominent noble dynasty. As a result, some Swiss municipalities became self-governing, whereas the others remained under feudalism for another 600 years. Evidence from a behavioral experiment, the World Values Survey and the Swiss Household Panel consistently show that individuals from historically self-governing municipalities exhibit stronger norms of cooperation today. Referenda data on voter-turnout allow me to trace these effects on individually costly and socially beneficial actions for over 150 years. Furthermore, norms of cooperation map into prosocial behaviors like charitable giving and environmental protection. Uniquely, Switzerland tracks every family's place of origin in registration data, which I use to demonstrate persistence from cultural transmission in a context of historically low migration.

   Authors  

Haoge Chang, Joel A. Middleton, P. M. Aronow

   Abstract   

Freedman (2008a,b) showed that the linear regression estimator is biased for the analysis of randomized controlled trials under the randomization model. Under Freedman's assumptions, we derive exact closed-form bias corrections for the linear regression estimator. We show that the limiting distribution of the bias corrected estimator is identical to the uncorrected estimator. Taken together with results from Lin (2013), our results show that Freedman's theoretical arguments against the use of regression adjustment can be resolved with minor modifications to practice.

   Authors  

Tom D. Holden

   Abstract   

Central banks wish to avoid self-fulfilling fluctuations. Interest rate rules with a unit response to real rates achieve this under the weakest possible assumptions about the behavior of households and firms. They are robust to household heterogeneity, hand-to-mouth consumers, non-rational household or firm expectations, active fiscal policy, and to any form of intertemporal or nominal-real links. They are easy to employ in practice, using inflation-protected bonds to infer real rates. With a time-varying short-term inflation target, they can implement an arbitrary inflation path, including optimal policy. This provides a way to translate policy makers' desired path for inflation into one for nominal rates. U.S. Federal Reserve behavior is remarkably close to that predicted by a real rate rule, given the desired inflation path of U.S. monetary policy makers. Real rate rules work thanks to the key role played by the Fisher equation in monetary

   Authors  

Matteo Cervellati, Giorgio Gulino, Paolo Roberti

   Abstract   

We exploit a natural experiment involving a randomization of votes across parties within coalitions in all local elections in Italy for over a decade. A lottery on the position of party symbols in the ballot papers allows estimating the causal effect of increasing votes to parties for coalition policies. A non-marginal random boost of votes shifts budgetary spending towards the treated party's platform, but only for issues that are salient in that party's political manifesto. We study the chains of mechanisms mapping votes into policies and link it to an increase in bargaining power within legislative majorities. Parties leverage their higher electoral support to gain the appointment of politically affiliated cabinet members. Empowering different parties also leads to the selection of cabinets with different socio-demographic characteristics. The unintentional experiment helps shed new light on mechanisms mapping votes to parties into coalition policies.

   Authors  

Xavier Giroud, Simone Lenzu, Quinn Maingi, Holger Mueller

   Abstract   

The gains from agglomeration economies are believed to be highly localized. Using confidential Census plant-level data, we show that large industrial plant openings raise the productivity not only of local plants but also of distant plants hundreds of miles away, which belong to large multi-plant, multi-region firms that are exposed to the local productivity spillover through one of their plants. This “global” productivity spillover does not decay with distance and is stronger if plants are in industries that share knowledge with each other. To quantify the significance of firms' plant-level networks for the propagation and amplification of local productivity shocks, we estimate a quantitative spatial model in which plants of multi-region firms are linked through shared knowledge. Counterfactual exercises show that while large industrial plant openings have a greater local impact in less developed regions, the aggregate gains are greatest when the plants locate in well-developed regions, which are connected to other regions through firms' plant-level (knowledge-sharing) networks.

   Authors  

Alexandr Kopytov, Bineet Mishra, Kristoffer Nimark, Mathieu Taschereau-Dumouchel

   Abstract   

Supply chain disturbances can lead to substantial increases in production costs. To mitigate these risks, firms may take steps to reduce their reliance on volatile suppliers. We construct a model of endogenous network formation to investigate how these decisions affect the structure of the production network and the level and volatility of macroeconomic aggregates. When uncertainty increases in the model, producers prefer to purchase from more stable suppliers, even though they might sell at higher prices. The resulting reorganization of the network tends to reduce macroeconomic volatility, but at the cost of a decline in aggregate output. The model also predicts that more productive and stable firms have higher Domar weights—a measure of their importance as suppliers—in the equilibrium network. We provide a basic calibration of the model using U.S. data to evaluate the importance of these mechanisms.

   Authors  

Ulrich K. Müller, Mark W. Watson 

   Abstract   

This paper proposes a model for, and investigates the consequences of, strong spatial dependence in economic variables. Our findings echo those of the corresponding “unit root” time series literature: Spatial unit root processes induce spuriously significant regression results, even with clustered standard errors or spatial HAC corrections. We develop large-sample valid unit root and stationarity tests that can detect such strong spatial dependence. Finally, we use simulations to study strategies for valid inference in regressions with persistent spatial data, such as spatial analogues of first-differencing transformations. Regressions from Chetty, Hendren, Kline, and Saez (2014) are used to illustrate the issues and methods.

   Authors  

Lukas Mahler, Minchul Yum

   Abstract   

We document significant gaps in wealth across health status over the life cycle in Germany—a country with a universal healthcare system and negligible out-of-pocket medical expenses. To investigate the underlying sources of these wealth-health gaps, we build a heterogeneous-agent life-cycle model in which health and wealth evolve endogenously. In the model, agents exert efforts to lead a healthy lifestyle, which helps maintain good health status in the future. Effort choices, or lifestyle behaviors, are subject to adjustment costs to capture their habitual nature in the data. We find that our estimated model generates the great majority of the empirical wealth gaps by health and quantify the role of earnings and savings channels through which health affects these gaps. We show that variations in individual health efforts account for around a quarter of the model-generated wealth gaps by health, illustrating their role as an amplification mechanism behind the gaps.

   Authors 

Joel Watson

  Abstract  

This paper develops a model of private bilateral contracting, in which an exogenous network determines the pairs of players who can communicate and contract with each other. After contracting, the players interact in an underlying game with globally verifiable productive actions and externally enforced transfers. The paper investigates whether such decentralized contracting can internalize externalities that arise due to parties being unable to contract directly with others whose productive actions affect their payoffs. The contract-formation protocol, called the “contracting institution,” is treated as a design element. The main result is positive: There is a contracting institution that supports efficient equilibria for any underlying game and connected network. A critical property is that the institution allows for sequential contract formation or revision. The equilibrium construction features assurance contracts and cancellation penalties.

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