The American Economic Journal: Macro economics was established in 2007 along with three other field journals focusing on micro economics, applied economics, and economic policy. As stated in the call for papers and on the jour nal Web site, AEJ: Macroeconomics focuses on studies of aggregate fluctuations and growth, and the role of policy in that context. Such studies often borrow from and interact with research in other fields, such as monetary theory, industrial organization, finance, labor economics, political economy, public finance, international econom ics, and development economics. To the extent that they make a contribution to macroeconom ics, papers in these fields are also welcome. The first order of business before the jour nal went into operation was the recruitment of a Coeditor. I was delighted that Steve Davis (University of Chicago) agreed to join. Steve and I have worked extremely well together. The second order of business was the recruit ment of members of the Board of Editors. This turned out to be easier than I expected, as nearly all the researchers we approached agreed to join. The Board of Editors consists of: Mark A. Aguiar (University of Rochester), Nick Bloom (Stanford University), Pierre Cahuc (Paris Pan theon), John Campbell (Harvard University), Yongsung Chang (University of Rochester), John H. Cochrane (University of Chicago, GSB), William Easterly (New York University), Jordi Gali (CREI), Martin Eichenbaum (Northwestern University), Erik Hurst (University of Chicago, GSB), Charles I. Jones (University of California, Berkeley), Anil Kashyap (University of Chicago, GSB), David Laibson (Harvard University), Jonathan A. Parker (Northwestern University), Maurice Obstfeld (University of California, Berkeley), Thomas Philippon (New York Uni versity), Chris Pissarides (London School of Economics), Valerie A. Ramey (University of California, San Diego), Christina D. Romer (Uni versity of California, Berkeley), David Romer (University of California, Berkeley), Thomas J. Sargent (New York University), Mark W. Watson (Princeton University), Ivan Werning Report of the Editor

Many states are implementing school-finance reforms which will have complex effects on income distribution, intergenerational income mobility, and welfare. This paper analyzes the static and dynamic effects of such reforms by constructing a dynamic general equilibrium model of public-education provision and calibrating it using U.S. data. We examine the consequences of a reform of a locally financed system to a state-financed system which equalizes expenditures per student across districts. We find that this policy increases both average income and the share of income spent on education. Steady-state welfare increases by 3.2 percent of steady-state income.

We consider two life cycle models of labor supply that use nonconvexities to generate retirement. In each case we derive a link between hours worked prior to retirement, the intertemporal elasticity of substitution for labor (IES), and the size of the nonconvexities. This link is robust to allowing for credit constraints and human capital accumulation by younger workers and suggests values for the IES that are .75 or higher.

Many states are implementing school-finance reforms which will have complex effects on income distribution, intergenerational income mobility, and welfare. This paper analyzes the static and dynamic effects of such reforms by constructing a dynamic general equilibrium model of public-education provision and calibrating it using U.S. data. The authors examine the consequences of a reform of a locally financed system to a state-financed system which equalizes expenditures per student across districts. They find that this policy increases both average income and the share of income spent on education. Steady-state welfare increases by 3.2 percent of steady-state income.

We construct a family model of labor supply that features adjustment along both the intensive and extensive margin. Intensive margin adjsutment is restricted to two values: full-time work and part-time work. Using simulated data from the steady state of the calibrated model, we examine whether standard labor supply regressions can uncover the true value of the intertemporal elasticity of labor supply parameter. We find positive estimated elasticities that are larger for women and that are highly significant, but they bear virtually no relationship to the underlying preference parameters.

We assess the empirical importance of changes in income and relative prices for structural transformation in the postwar United States. We explain two natural approaches to the data: sectors may be categories of final expenditure or value added; e.g., the service sector may be the final expenditure on services or the value added from service industries. We estimate preferences for each approach and find that with final expenditure income effects are the dominant force behind structural transformation, whereas with value-added categories price effects are more important. We show how the input-output structure of the United States can reconcile these findings.

A longstanding question in economics is why some countries are so much richer than others. Today, for example, income per capita in the world's richest countries is roughly thirty-five times greater than it is in the world's poorest countries. Recent work argues that the proximate cause of the disparity is that today's poor countries began the process of industrialization much later and that this process is slow. In this paper we argue that a model of structural transformation provides a useful theory of both why industrialization occurs at different dates, and why it proceeds slowly. A key implication of this model is that growth in agricultural productivity is central to development, a message that also appears prominently in the traditional development literature.

We build a hybrid model of the aggregate labor market that features both standard labor supply forces and frictions in order to study the cyclical properties of gross worker flows across the three labor market states: employment, unemployment, and nonparticipation. Our parsimonious model is able to capture the key features of the cyclical movements in gross worker flows. Despite the fact that the wage per efficiency unit is constant over time, intertemporal substitution plays an important role in shaping fluctuations in the participation rate.