news
Congratulations to Roxana Mihet, the winner of the ECB's Young economists' competition 2020
“I show that the explosion of financial technologies for retail investors does not guarantee broad increases in household wealth. Instead, the sophisticated investors who already have relatively high levels of wealth are most likely to benefit from many of the new technologies.”
read more
Petra Moser and Michela Giorcelli’s paper on copyright protection, featured in an animation by econimate
Petra Moser is a Professor of Economics at NYU Stern.
watch video
Radical Uncertainty: Decision-Making Beyond the Numbers, by Mervyn King and John Kay
COVID-19 is a classic example of radical uncertainty. We knew that pandemics were likely but we did not know enough to attach a probability to an event such as “a virus will emerge from Wuhan in China in December 2019”. We do not know what the future will hold. But we must make decisions anyway. So we crave certainties which cannot exist and invent knowledge we cannot have. It is tempting to believe that we attach subjective probabilities to all possible future events – but misguided...
read moreresearch
Larry White's "Rethinking Antitrust," published in the Milken Institute Review
Antitrust policy in the U.S. has recently gained an unusual amount of media attention. There are critics who have argued that a major overhaul of antitrust policy is needed. This paper argues that instead there are some important but more modest changes that could go a long way toward significantly strengthening the role that antitrust can play in keeping the U.S. economy competitive, vibrant, and innovative.
read more
Paul Wachtel, Moritz Kuhn, Alina Bartscher, and Moritz Schularick's "Monetary Policy and Racial Inequality," published by the Federal Reserve Bank of New York
This paper aims at an improved understanding of the relationship between monetary policy and racial inequality. We investigate the distributional effects of monetary policy in a unified framework, linking monetary policy shocks both to earnings and wealth differentials between black and white households. Specifically, we show that, although a more accommodative monetary policy increases employment of black households more than white households, the overall effects are small. At the same time...
read more
Adam Brandenburger, Alexander Danieli, and Amanda Friedenberg's "The Implications of Finite-Order Reasoning," forthcoming in Theoretical Economics
The epistemic conditions of rationality and mth-order strong belief of rationality (RmSBR, Battigalli and Siniscalchi, 2002) formalize the idea that players engage in contextualized forward-induction reasoning. This paper characterizes the behavior consistent with RmSBR across all type structures. In particular, in a class of generic games, R(m −1)SBR is characterized by a new solution concept we call an m-best response sequence (m-BRS). Such sequences are an iterative version of...
read more
Adam Brandenburger, Amanda Friedenberg, and Terri Kneeland's "Two Approaches to Iterated Reasoning in Games"
Level-k analysis and epistemic game theory are two different ways of investigating iterative reasoning in games. This paper explores the relationship between these two approaches. An important difference between them is that level-k analysis begins with an exogenous anchor on the players’ beliefs, while epistemic analysis begins with arbitrary epistemic types (hierarchies of beliefs). To close the gap, we develop the concept of a level-k epistemic type structure, that incorporates the...
read more
Larry White and John Kwoka's "The “Antitrust Revolution” and The Antitrust Revolution: A Perspective from the Inside" published in The Antitrust Bulletin
There clearly has been a revolution in the way that modern microeconomics has come to occupy a central role in the development of antitrust policy and in the structuring of antitrust cases over the past forty years or so. And during the past thirty plus years, there have been seven editions of The Antitrust Revolution that we have edited. In this essay, we offer our perspective on the “antitrust revolution,” as well as provide an insiders’ view of those seven editions and how they came to be.
read more
Luis Cabral, Ajay Bhaskarabhatla, Deepak Hegde, & Thomas Peeters' "Are Inventors or Firms the Engines of Innovation?" published in Management Science
In this study, we empirically assess the contributions of inventors and firms for innovation using a 37-year panel of U.S. patenting activity. We estimate that inventors’ human capital is 5–10 times more important than firm capabilities for explaining the variance in inventor output. We then examine matching between inventors and firms and find highly talented inventors are attracted to firms that (i) have weak firm-specific invention capabilities and (ii) employ other talented inventors...
read more
Larry White's "Antitrust Economics and Consumer Protection Economics in Policy and Litigation: Why the Disparity?" published in the Economic Inquiry
The article argues that the disparity between the greater attention that economics has given to antitrust policy versus the lesser attention to consumer protection policy is due to 3 causes: a) the longer intellectual history and development of industrial organization; the history and culture of the Federal Trade Commission (where both policies are supposed to be pursued); and the splintering of consumer protection policy among a large number of federal and state agencies.
read more
Thomas Cooley and Vincenzo Quadrini on The twenty-fifth anniversary of “Frontiers of Business Cycle Research"
Preface by Tom Cooley
It is very gratifying to have a conference celebrating the 25th Anniversary of the publication of Frontiers of Business Cycle Research (Cooley (1995)). I am deeply grateful to all who have contributed papers to the conference and to this special Volume of The Review of Economic Dynamics. It is especially significant to me since, in addition to putting together Frontiers, I was the founding editor of RED. It is clear from the diverse set of papers presented here that...
Richard Sylla on changes in the structure of US banking, forthcoming in the Financial History Review
A century ago the US commercial banking system was exceptional in two ways. It was by good measure the largest commercial banking system of any country. And it was different from the commercial banking systems of other leading countries in having tens of thousands of independent banks with very few branches rather than the more typical pattern of a far smaller number of banks with many branches. Today, a century later, the US system is more normal than exceptional, dominated by a small number...
read more
Thomas Cooley, Ramon Marimon, and Vincenzo Quadrini's "Commitment in Organizations and the Competition for Talent," published in the Review of Economic Studies
We show that a change in organizational structure from partnerships to public companies—which weakens contractual commitment—can lead to higher investment in high return-and-risk activities, higher productivity (value added per employee) and greater income dispersion (inequality). These predictions are consistent with the observed evolution of the financial sector where the switch from partnerships to public companies has been especially important in the decades that preceded the 21st Century...
read more