{"title":"Price Selection in the Microdata","authors":"P. Karadi, Raphael S. Schoenle, Jesse Wursten","doi":"10.1086/730220","DOIUrl":"https://doi.org/10.1086/730220","url":null,"abstract":"","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"11 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140425377","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Do economies adjust slowly to certain technological innovations and more rapidly to others? We argue that the adjustment is slower when innovations mainly affect production activities that intensively use more specific skills. The reason is that the adjustment is driven more by the slow entry of younger generations of workers who invest in the skills that became more valuable and less by the relatively fast reallocation of older workers whose skills must be transferred across activities. We build an overlapping generations model of technological transitions that exhibits these features, motivated by new evidence documenting differences in how the U.S. labor market adjusted to two major technological innovations: Electricity in the early 20th century, and late 20th century advances in Information & Communications technologies (ICT). Our theoretical analysis yields a novel q -theory representation of equilibrium dynamics linking skill differences across generations to lifetime wage differentials ( q ). This allows us to sharply characterize when technological transitions are faster and, in particular, explain why the adjustment to ICT, but not Electricity, relied entirely on the slow entry of younger generations.
{"title":"Fast and Slow Technological Transitions","authors":"Rodrigo Adão, Martin Beraja, Nitya Pandalai-Nayar","doi":"10.1086/730223","DOIUrl":"https://doi.org/10.1086/730223","url":null,"abstract":"Do economies adjust slowly to certain technological innovations and more rapidly to others? We argue that the adjustment is slower when innovations mainly affect production activities that intensively use more specific skills. The reason is that the adjustment is driven more by the slow entry of younger generations of workers who invest in the skills that became more valuable and less by the relatively fast reallocation of older workers whose skills must be transferred across activities. We build an overlapping generations model of technological transitions that exhibits these features, motivated by new evidence documenting differences in how the U.S. labor market adjusted to two major technological innovations: Electricity in the early 20th century, and late 20th century advances in Information & Communications technologies (ICT). Our theoretical analysis yields a novel q -theory representation of equilibrium dynamics linking skill differences across generations to lifetime wage differentials ( q ). This allows us to sharply characterize when technological transitions are faster and, in particular, explain why the adjustment to ICT, but not Electricity, relied entirely on the slow entry of younger generations.","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"74 14","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140424147","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A Model of Zombie Firms and the Perils of Negative Real Interest Rates","authors":"Guillaume Rocheteau","doi":"10.1086/729502","DOIUrl":"https://doi.org/10.1086/729502","url":null,"abstract":"","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"31 3","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139609091","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, I evaluate the role of fluctuations in business formation in amplifying business cycles. To do this, I study the response of employment to shocks in a general equilibrium model of producer dynamics with entry and exit. The model features producer heterogeneity, adjustment frictions, and a variable demand elasticity. I find that while heterogeneity reduces the effects of entry on the broader economy, the variable demand elasticity and adjustment frictions amplify these effects, so that entry fluctuations lead to economically meaningful amplification of business cycle shocks.
{"title":"The Importance of Entry in the Business Cycle: What Are the Roles of Markups, Adjustment Costs, and Heterogeneity?","authors":"William Gamber","doi":"10.1086/726227","DOIUrl":"https://doi.org/10.1086/726227","url":null,"abstract":"In this paper, I evaluate the role of fluctuations in business formation in amplifying business cycles. To do this, I study the response of employment to shocks in a general equilibrium model of producer dynamics with entry and exit. The model features producer heterogeneity, adjustment frictions, and a variable demand elasticity. I find that while heterogeneity reduces the effects of entry on the broader economy, the variable demand elasticity and adjustment frictions amplify these effects, so that entry fluctuations lead to economically meaningful amplification of business cycle shocks.","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123665720","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the determinants of lifetime earnings (LE) inequality in the United States by focusing on latent heterogeneity in job-ladder dynamics and on-the-job learning. We use administrative data to document a novel set of moments on job mobility and earnings growth across the LE distribution. We then estimate a structural model featuring a rich set of worker types and firm heterogeneity. We find vast ex ante differences in job-loss, job-finding, and contact rates across worker types. These differences account for 75% of the lifetime wage growth differential among the bottom half of the LE distribution. Above the median, almost all lifetime wage growth differences are a result of Pareto-distributed learning ability.
{"title":"Anatomy of Lifetime Earnings Inequality: Heterogeneity in Job-Ladder Risk versus Human Capital","authors":"Serdar Ozkan, Jae Song, Fatih Karahan","doi":"10.1086/725790","DOIUrl":"https://doi.org/10.1086/725790","url":null,"abstract":"We study the determinants of lifetime earnings (LE) inequality in the United States by focusing on latent heterogeneity in job-ladder dynamics and on-the-job learning. We use administrative data to document a novel set of moments on job mobility and earnings growth across the LE distribution. We then estimate a structural model featuring a rich set of worker types and firm heterogeneity. We find vast ex ante differences in job-loss, job-finding, and contact rates across worker types. These differences account for 75% of the lifetime wage growth differential among the bottom half of the LE distribution. Above the median, almost all lifetime wage growth differences are a result of Pareto-distributed learning ability.","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134382722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop and make available firm-level metrics regarding a key component of intangible capital—firms’ customer bases—using household transaction data. Linking household spending to top customer-facing firms, we show that churn in customer bases is associated with lower markups and market-to-book ratios and higher leverage. Churn is closely linked to firm-level volatility and risk. This new measure provides a clearer picture of firms’ customer and brand capital than existing metrics and is also observable for private firms. We demonstrate that low levels of customer churn push firms away from neoclassical investment responsiveness and that low-churn firms are better able to insulate organization capital from the risk of key-talent flight.
{"title":"Customer Churn and Intangible Capital","authors":"S. Baker, Brian Baugh, Marco Sammon","doi":"10.1086/725789","DOIUrl":"https://doi.org/10.1086/725789","url":null,"abstract":"We develop and make available firm-level metrics regarding a key component of intangible capital—firms’ customer bases—using household transaction data. Linking household spending to top customer-facing firms, we show that churn in customer bases is associated with lower markups and market-to-book ratios and higher leverage. Churn is closely linked to firm-level volatility and risk. This new measure provides a clearer picture of firms’ customer and brand capital than existing metrics and is also observable for private firms. We demonstrate that low levels of customer churn push firms away from neoclassical investment responsiveness and that low-churn firms are better able to insulate organization capital from the risk of key-talent flight.","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129275525","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Welcome to the inaugural issue of the Journal of Political Economy Macroeconomics (JPE Macro). JPE Macro, which is published by the University of Chicago Press and is closely tied to the Journal of Political Economy, publishes pathbreaking work that is of relevance to macroeconomics. As you will see from the papers in this and future issues, “macroeconomics” is interpreted in an extremely broad sense. This includes topics related to the traditional macroeconomic areas of growth, fluctuations, and distribution as well as issues that connect and interact with topics from monetary economics, labor economics, international trade, finance, industrial organization, political economy, public finance, and development economics. I would like to thank the amazing set of editors of JPE Macro: Cristina Arellano, Anmol Bhandari, Ariel Burstein, Chris Tonetti, and Joe Vavra. Thanks to their hard work and the outstanding efforts of dozens of anonymous referees, we have assembled a truly outstanding collection of papers in the pages that follow. In addition to publishing and disseminating important and innovative research in macroeconomics, the establishment of JPE Macro provides an opportunity to contribute to the economic profession in several ways. First, the journal is committed to improving efficiency in the refereeing and publication process in economics. This is achieved in part through our integration with the Journal of Political Economy, which allows us to avoid unnecessary duplication of refereeing time. It is also achieved
{"title":"Editor’s Introduction to JPE Macro","authors":"Greg Kaplan","doi":"10.1086/724546","DOIUrl":"https://doi.org/10.1086/724546","url":null,"abstract":"Welcome to the inaugural issue of the Journal of Political Economy Macroeconomics (JPE Macro). JPE Macro, which is published by the University of Chicago Press and is closely tied to the Journal of Political Economy, publishes pathbreaking work that is of relevance to macroeconomics. As you will see from the papers in this and future issues, “macroeconomics” is interpreted in an extremely broad sense. This includes topics related to the traditional macroeconomic areas of growth, fluctuations, and distribution as well as issues that connect and interact with topics from monetary economics, labor economics, international trade, finance, industrial organization, political economy, public finance, and development economics. I would like to thank the amazing set of editors of JPE Macro: Cristina Arellano, Anmol Bhandari, Ariel Burstein, Chris Tonetti, and Joe Vavra. Thanks to their hard work and the outstanding efforts of dozens of anonymous referees, we have assembled a truly outstanding collection of papers in the pages that follow. In addition to publishing and disseminating important and innovative research in macroeconomics, the establishment of JPE Macro provides an opportunity to contribute to the economic profession in several ways. First, the journal is committed to improving efficiency in the refereeing and publication process in economics. This is achieved in part through our integration with the Journal of Political Economy, which allows us to avoid unnecessary duplication of refereeing time. It is also achieved","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125087259","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Axelle Ferrière, Philipp Grübener, Gaston Navarro, Oliko Vardishvili
We study the optimal design of means-tested transfers and progressive income taxes. In a simple analytical model, we show that adding a transfer to a log-linear tax induces welfare gains almost as large as in the second-best allocation. Transfers allow for more progressive average than marginal tax and transfer rates, achieving redistribution while preserving efficiency. In a rich dynamic model, we quantify the optimal fiscal plan. We use new flexible functions featuring targeted transfers and progressive income taxes, delivering a good empirical fit across the income distribution. Transfers should be larger than currently in the United States and financed with moderate income tax progressivity.
{"title":"On the Optimal Design of Transfers and Income Tax Progressivity","authors":"Axelle Ferrière, Philipp Grübener, Gaston Navarro, Oliko Vardishvili","doi":"10.1086/725034","DOIUrl":"https://doi.org/10.1086/725034","url":null,"abstract":"We study the optimal design of means-tested transfers and progressive income taxes. In a simple analytical model, we show that adding a transfer to a log-linear tax induces welfare gains almost as large as in the second-best allocation. Transfers allow for more progressive average than marginal tax and transfer rates, achieving redistribution while preserving efficiency. In a rich dynamic model, we quantify the optimal fiscal plan. We use new flexible functions featuring targeted transfers and progressive income taxes, delivering a good empirical fit across the income distribution. Transfers should be larger than currently in the United States and financed with moderate income tax progressivity.","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2022-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124460471","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study a search-theoretic model of imperfect competition in product markets where sellers make an ex ante investment in the quality of their product variety. Equilibrium exists and is unique. In equilibrium, search frictions not only cause sellers to offer different surpluses to buyers but also cause sellers to choose different qualities for their varieties. Equilibrium is efficient. As search frictions decline, the market becomes increasingly unbalanced, as a vanishing fraction of sellers produces varieties of increasing quality, offers increasing surplus to their customers, and captures an increasing share of the market, while a growing fraction of sellers produces varieties of decreasing quality. Gains from trade and welfare grow at constant rates.
{"title":"Vertical Differentiation in Frictional Product Markets","authors":"J. Albrecht, G. Menzio, Susan Vroman","doi":"10.1086/725334","DOIUrl":"https://doi.org/10.1086/725334","url":null,"abstract":"We study a search-theoretic model of imperfect competition in product markets where sellers make an ex ante investment in the quality of their product variety. Equilibrium exists and is unique. In equilibrium, search frictions not only cause sellers to offer different surpluses to buyers but also cause sellers to choose different qualities for their varieties. Equilibrium is efficient. As search frictions decline, the market becomes increasingly unbalanced, as a vanishing fraction of sellers produces varieties of increasing quality, offers increasing surplus to their customers, and captures an increasing share of the market, while a growing fraction of sellers produces varieties of decreasing quality. Gains from trade and welfare grow at constant rates.","PeriodicalId":272883,"journal":{"name":"Journal of Political Economy Macroeconomics","volume":"248 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115195433","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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