Knowledge that Transforms

Current Editorial Board:Olivier Coibion, University of Texas, AustinRaymond Fisman, Boston UniversityBenjamin R. Handel, University of California, BerkeleyRema N. Hanna (Co-Chair), Harvard UniversityBrian A. Jacob, University of MichiganShachar Kariv, University of California, BerkeleyAmit K. Khandelwal (Co-Chair), Columbia UniversityXiaoxia Shi, University of Wisconsin–MadisonRecently Retired from the Editorial Board:Amitabh Chandra, Harvard UniversityBrian S. Graham, University of California, BerkeleyAsim I. Khwaja, Harvard UniversityRohini Pande, Yale UniversityShort Paper Policy:Prior to 2017, Notes submitted were limited to 3,000 words and printed in their own section at the back of each issue. In early 2017, the policy regarding Notes changed: shorter papers were still considered, but there were no specific guidelines regarding length. Notes were not advertised on the Review of Economics and Statistics submission website (but were still allowed to be submitted). In the two years following the policy change, Note submissions dropped 30%: REStat published five Notes (compared to ten Notes between 2015 and 2017).In a desire to take advantage of the growing demand for shorter papers, REStat introduced Short Papers in December 2019. The former policies regarding Notes are no longer in effect. The hope is that this policy change will increase the number of quality Short Paper submissions that REStat receives and publishes.Short Papers are strictly held to a size limitation of 6,000 words and five exhibits. For each exhibit before the maximum five, the authors may add up to 200 words toward the word limit; thus, a paper with no exhibits must have 7,000 or fewer words. Online appendix materials are allowed of modest length—no more than 20 pages—but the papers should be self-contained. Short Papers will be held to the same quality standard as regular-length papers and undergo the usual review process and turnaround times. Since all published papers by REStat have the same quality threshold, Short Papers will be published alongside regular-length papers rather than in a separate issue.Table 1–Manuscripts Submitted and Published:This table shows the trends in papers submitted and published over the past five years. Paper submissions remained steady from 2015 to 2016. In the years following, the journal has seen increased growth in paper submission: 7% in 2017, 14% in 2018, and 11% in 2019. The number of published papers has remained steady, ranging from 66 to 78 papers per year.Table 2–Status of Manuscripts by Year of Submission:This table shows the status of manuscripts submitted over the past five years. The percent of papers summarily rejected remains steady, ranging from 61% to 64% of papers submitted. The percent of papers sent out for review but ultimately rejected also remains stable, ranging from 28% to 31% of papers. Acceptance rates range from 5% to 8% of papers submitted. Papers submitted in 2019 have not had enough time to accurately reflect the acceptance rate.Table 3–Decision Time for Manuscripts Sent for Review:This table reports the decision time for manuscripts sent out to referees for review over the past five years. The journal has greatly improved turnaround times. In 2015 and 2016, the average decision time for papers sent to referees ranged from 120 to 129 days. The average decision time in 2019 improved to 82 days. In addition, the decision time at the right tail improved substantially.Table 4–Distribution of First Decision Times, by Submission Year:This table includes all first-round paper submissions and shows the distribution of decision times in monthly increments for the past five years. This table also reflects the improvement in the journal's decision turnaround times. In 2019, 93% of manuscripts received a decision within four months and 99% within six months.Table 5–Subject Matter of Published Manuscripts, 2019:This table shows the distribution of the subject matter of papers published in 2019. Published papers covered a variety of subjects, but the most common were microeconomics and mathematical and quantitative methods.

This paper provides new insights into the relationship between structural change and the fertility transition. We exploit the spread of an agricultural pest in the American South in the 1890s as plausibly exogenous variation in agricultural production to establish a causal link between earnings opportunities in agriculture and fertility. Households staying in agriculture reduced fertility because children are a normal good, while households switching to manufacturing reduced fertility because of the higher opportunity costs of raising children. The lower earnings opportunities in agriculture also decreased the value of child labor, which increased schooling, consistent with a quantity-quality model of fertility.

We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the uncertainty shock idea of Bloom (2009) with a model of international trade, extending the idea to the open economy. Firms import intermediate inputs from home or foreign suppliers, but with higher costs in the latter case. Due to fixed costs of ordering firms hold an inventory of intermediates. We show that in response to an uncertainty shock firms optimally adjust their inventory policy by cutting their orders of foreign intermediates disproportionately strongly. In the aggregate, this response leads to a bigger contraction in international trade flows than in domestic economic activity. We confront the model with newly-compiled monthly aggregate U.S. import data and industrial production data going back to 1962, and also with disaggregated data back to 1989. Our results suggest a tight link between uncertainty and the cyclical behavior of international trade.

We develop an instrumental variable approach for identification of dynamic treatment effects on survival outcomes in the presence of dynamic selection, noncompliance, and right-censoring. The approach is nonparametric and does not require independence of observed and unobserved characteristics or separability assumptions. We propose estimation procedures and derive asymptotic properties. We apply our approach to evaluate a policy reform in which the pathway of unemployment benefits as a function of the unemployment duration is modified. Those who were unemployed at the reform date could choose between the old and the new regime. We find that the new regime has a positive average causal effect on the job finding rate.

I identify significant effects of devaluation risk on interest rates and output using US silver coinage policy news between 1878 and 1900 as clean shocks to exchange rate expectations. The Free Silver movement heightened fears the United States would abandon the gold standard and depreciate the dollar. Because Congress, rather than a central bank, set silver coinage policy, silver policy news was likely uncorrelated with economic shocks. Corporate bonds exposed to dollar devaluation returned an additional 1 percent relative to safer bonds when silver risk decreased. Additionally, increased silver coinage risk is associated with an economically significant fall in industrial production.

We provide evidence on three mechanisms that can reconcile frequent individual price changes with sluggish aggregate price dynamics. To that end, we estimate a semistructural model that can extract information about real rigidities and the distribution of price stickiness from aggregate data. Hence, the model can also speak to the debate about the aggregate implications of sales. Our estimates indicate large real rigidities and substantial heterogeneity in price stickiness. Moreover, the cross-sectional distribution of price stickiness implied by aggregate data is in line with an empirical distribution obtained from microprice data that factors out sales and product substitutions.

We provide new evidence on the cyclicality of employers' real labor costs using BLS establishment job data for the 1982–2018 period. Average straight-time wages have become countercyclical since the financial crisis and the subsequent Great Recession. So have benefit expenditures and overall labor costs, as well as major benefit expenditures, including health insurance and Social Security. Consistent with prior literature, we find that total earnings—the sum of straight-time wages, bonuses, and overtime earnings—were procyclical before 2008; even earnings have become countercyclical since then. The increasing countercyclicality of labor costs is largely attributable to periods with below-trend GDP.

Aggregate price levels are positively related to GDP per capita across countries. We propose a mechanism that rationalizes this observation through sectoral differences in intermediate input shares. As productivity and income grow, so do wages relative to intermediate input prices, which increases the relative price of nontradables if tradable sectors use intermediate inputs more intensively. We show that sectoral differences in input intensities can account for about half of the observed elasticity of the aggregate price level with respect to GDP per capita. The mechanism has stark implications for industry-level real exchange rates that are strongly supported by the data.

Using a series of Pakistani tax reforms and administrative records, I document that taxable income responses induced by to-zero tax cuts are orders of magnitude larger than ones induced by similar-sized other cuts. This finding is remarkably robust to alternative specifications and holds for both the self-employed and wage earners. I explore salience, selective enforcement, and discontinuous evasion costs as explanations of the observed behavior. I find that the data favor the last explanation. The difference between the two sets of responses is primarily driven by a large, discrete tax evasion response, which is included in the former but not in the latter behavior. I estimate the difference as a lower bound on tax evasion, showing that at least 70% of the income of low- and middle-income self-employed and 1% of low-income wage earners goes unreported.