The paper summarized here is part of the Fall 2022 edition of the Brookings Papers on Economic Activity (BPEA), the leading conference series and journal in economics for timely, cutting-edge […]
Archives: Research Highlights
Diagnostic Business Cycles
A large psychology literature argues that, due to selective memory recall, decision-makers’ forecasts of the future are overly influenced by the perceived news. We adopt the diagnostic expectations (DE) paradigm […]
Designing Securities for Scrutiny
We investigate the effect of scrutiny (e.g., credit ratings, analyst reports, or mandatory disclosures) on the security design problem of a privately informed issuer. We show that scrutiny has important […]
Threats to Central Bank Independence: High-Frequency Identification with Twitter
A high-frequency approach is used to analyze the effects of President Trump’s tweets that criticize the Federal Reserve on financial markets. Identification exploits a short time window around the precise […]
Hybrid Decision Model and the Ranking of Experiments
Departing from the reduction of compound lotteries axiom on multi-stage lotteries, this paper proposes a new hybrid model to analyze decision trees. Applied to multi-stage decision trees induced by experiments, […]
The Supplemental Expenditure Poverty Measure: A New Method for Measuring Poverty
A new method of measuring poverty in the United States—based on families’ spending and easily accessible resources—finds that about eight million more people lived in poverty in 2019 than reported […]
Comparative Incompleteness: Measurement, Behavioral Manifestations and Elicitation
This paper introduces measures of overall incompleteness of preference relations under risk and uncertainty, as well as measures of incompleteness of beliefs and tastes. These measures are used to define […]
Due Diligence
We propose a model of due diligence and analyze its effect on prices, payoffs, and deal completion. In our model, if the seller accepts an offer, the winning bidder (or […]
Market Power in Neoclassical Growth Models
This article examines the optimal accumulation of capital and the effects of government debt in neoclassical growth models in which firms have market power and therefore charge prices above marginal […]