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doi: 10.1257/jel.20241340pmid: N/A
AbstractThis article reviews the theory of imperfectly competitive financial markets, with special attention to recent contributions and rapidly growing areas of research. We highlight the methodological advances that have led to a unified analytic framework for static, dynamic, centralized, and decentralized markets. Accounting for imperfect competition has not only reshaped our understanding of financial market data but also underscored the importance of market structure, motivated novel policy tools and objectives, and opened new avenues for market design. We identify areas where new models and techniques could enable further progress on equilibrium and market design analyses for markets with large players. (JEL D43, D47, D53, G10)
Haaland, Ingar; Roth, Christopher; Stantcheva, Stefanie; Wohlfart, Johannes
doi: 10.1257/jel.20251780pmid: N/A
AbstractWe survey the recent literature in economics using open-ended survey data to uncover mechanisms behind economic beliefs and behaviors. We first provide an overview of different applications, including the measurement of motives, mental models, narratives, attention, information transmission, and recall. We next describe different ways of eliciting open-ended responses, including single-item open-ended questions, speech recordings, and artificial intelligence–powered qualitative interviews. Subsequently, we discuss methods to annotate and analyze such data with a focus on recent advances in large language models. Our review concludes with a discussion of promising avenues for future research. (JEL C83, C90, D83, D91)
Auld, M. Christopher; Fenichel, Eli P.; Toxvaerd, Flavio
doi: 10.1257/jel.20241649pmid: N/A
AbstractWe synthesize the literature on economic epidemiology, the interdisciplinary field that draws on the ideas and methods of economics to analyze individual behavior, aggregate disease dynamics, and public policy during infectious disease epidemics. We cover the main models of individual behavior during epidemics, related econometric evidence, and models of disease dynamics appropriate for the analysis of a range of infectious diseases. We outline modeling approaches to a range of control measures including non-pharmaceutical interventions such as stay-at-home mandates, quarantines, and sheltering, and pharmaceutical interventions such as vaccines and treatment. Last, we characterize different types of externalities and heterogeneities and discuss the targeting and implementation of policies through restrictions and incentives. (JEL D62, D91, H51, I12, I18)
doi: 10.1257/jel.20251631pmid: N/A
AbstractThis paper provides analytic guides to recent literature on China’s macroeconomic development, emphasizing the critical role of the gradualist reform approach. Our analysis suggests that from 1978 to 1997, the gradualist approach contributed to China’s aggregate total factor productivity and economic growth primarily through policies that facilitated the reallocation of surplus labor from agriculture to nonagricultural sectors. Since 1998, the government’s focus shifted, with various reforms encouraging large enterprises, whether state owned or privately owned, to enter capital-intensive sectors, making capital deepening the main driver of economic growth. While this strategy sustained China’s GDP growth, it also increased trade tensions with global partners, created barriers to transitioning to a consumption-led economy, and threatened China’s long-term financial stability, casting long shadows over the Chinese economy. (JEL E23, F14, L16, O11, O47, P21, P24)
doi: 10.1257/jel.20241616pmid: N/A
AbstractNatural experiments, high stakes, expert subjects, knowledge of the precise objectives and exact rules, clean measurement, observability of strategies, incentives, actions and consequences, large datasets, exogenous rule changes, distinct social effects, and no Hawthorne effects. These and other desirable attributes for empirical work are found in sports settings. In sports, features that often characterize either the lab or the field are found simultaneously. Sports can offer the best of both worlds. Reluctance to recognize these advantages reflects a misunderstanding of the virtues of sports data, and this reluctance has discouraged the study of these settings and slowed down the production of knowledge. This survey reviews literature that shows how sports settings have made it possible to implement the first successful test, or the best test to date, of various models and hypotheses, and to discover new phenomena. It is not a question of what economics can do for sports, but what sports can do for economics. (JEL C80, C90, Z20)
Eggertsson, Gauti B.; Egiev, Sergei K.
doi: 10.1257/jel.20241306pmid: N/A
AbstractThis review of liquidity traps unifies three landmark economic downturns—the US Great Depression, the Great Recession, and Japan’s Long Recession—into a single analytical framework. We examine various forces that drive natural interest rates negative: temporarily (such as banking crises and debt overhangs) or permanently (such as demographic shifts and inequality). When policy rates hit the zero lower bound, conventional monetary tools lose traction. Under a standard monetary policy regime, counterintuitive paradoxes emerge: Greater price flexibility deepens recessions, and positive supply shocks become contractionary. We show how policy effects—including the size of fiscal multipliers, forward guidance, and these paradoxes—depend critically on the monetary-fiscal regime and on central bank credibility. The paper explains how regime changes, such as Franklin D. Roosevelt’s 1933 abandonment of the gold standard and balanced-budget dogmas, successfully reversed deep slumps by credibly shifting expectations. We examine whether secular-stagnation forces are likely to assert themselves in the coming decades.(JEL E32, E42, E43, E52, E62, G01, G21)
doi: 10.1257/jel.63.4.1552.r1pmid: N/A
AbstractKaren Dynan of Harvard University reviews “The Measure of Progress: Counting What Really Matters” by Diane Coyle. The Econlit abstract of this book begins: “Explores the shortcomings in standard economic measurement and why the current metrics miss important considerations, highlighting over a decade's worth of research on questions of economic statistics and measurement.”
doi: 10.1257/jel.63.4.1552.r2pmid: N/A
AbstractElaine Kelly of Institute for Fiscal Studies and The Health Foundation reviews “The Economics of the UK Health and Social Care Labour Market: How Labour Economics Can Inform Policy toward the Frontline Care Workforce” by Robert Elliott. The Econlit abstract of this book begins: “Discusses economic theories key to understanding the workings of the labor markets for frontline health- and social-care workers in the United Kingdom, focusing on the theories of net advantages, human capital, the production function, the labor demand schedule, and equilibrium in the labor market.”
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