A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.

• Birru, J., Gokkaya, S., Liu, X., & Stulz, R. (2024). Are Analyst “Top Picks” Informative? The Review of Financial Studies, 37, 1538–1583.

  Following the Global Settlement, analysts extensively use a top pick designation allowing for greater granularity of information among buy recommended stocks, but conflicts of interest can potentially influence this designation. Examining a novel sample of top picks, we find that a calendar-time portfolio of top picks generates an abnormal performance of 17.6% per year. Top picks have greater investment value than do buy recommendations and alternative analyst investment strategies. Both institutional and retail investors trade in response to top picks. However, only institutional investors appear to identify top picks that have greater investment value when they are announced.

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• Bisin, A., & Verdier, T. (2024). On the Joint Evolution of Culture and Political Institutions: Elites and Civil Society. Journal of Political Economy, 132, 1485–1564.

  We provide an abstract model of the interaction between culture and political institutions. The model is designed to study the political economy of elites and civil society on the determination of long-run socioeconomic activity. We characterize conditions such that the cultural traits of elites and civil society and the institutions determining their relative political power complement (substitute) each other, giving rise to a multiplier effect that amplifies (dampens) their combined ability to spur socioeconomic activity. We show how the joint dynamics may display hysteresis and oscillations, depending on the form of the interaction between elites and civil society.

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• Bordalo, P., Gennaioli, N., Porta, R. L., & Shleifer, A. (2024). Belief Overreaction and Stock Market Puzzles. Journal of Political Economy, 132, 1450–1484.

  We construct an index of long-term expected earnings growth for S&P 500 firms and show that it has remarkable power to jointly predict future errors in expectations and stock returns, in both the aggregate market and the cross section. The evidence supports a mechanism whereby good news causes investors to become too optimistic about long-term earnings growth. This leads to inflated stock prices and, as beliefs are systematically disappointed, subsequent low returns in the aggregate market. Overreaction of long-term expectations helps resolve major asset-pricing puzzles without time-series or cross-sectional variation in required returns.

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• Born, B., D’Ascanio, F., Müller, G. J., & Pfeifer, J. (2024). Mr. Keynes Meets the Classics: Government Spending and the Real Exchange Rate. Journal of Political Economy, 132, 1642–1683.

  In economies with fixed exchange rates, the adjustment to government-spending shocks is asymmetric. Expansionary shocks are absorbed by the real exchange rate, contractionary shocks by output. This result emerges in a small open-economy model with downward nominal wage rigidity and is supported by new empirical evidence based on panel data from different exchange-rate regimes. The exchange-rate regime, economic slack, inflation, and how spending is financed all matter for the fiscal transmission mechanism in the way predicted by the model. Estimates that fail to distinguish between the effects of positive and negative shocks are subject to a ?depreciation bias.?

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• Bradley, D., Hanousek, J., Jr., Jame, R., & Xiao, Z. (2024). Place Your Bets? The Value of Investment Research on Reddit’s Wallstreetbets. The Review of Financial Studies, 37, 1409–1459.

  We examine the value of due diligence recommendations on Reddit’s Wallstreetbets (WSB) platform. Before the Gamestop (GME) short squeeze, recommendations are significant predictors of returns and cash-flow news. This predictability is eliminated post-GME. Post-GME, the fraction of reports emphasizing price-pressure or attention-grabbing stocks dramatically increases, and the decline in informativeness is concentrated in these reports. Similarly, retail trade informativeness is particularly strong following DD reports in the pre-GME period, but not post-GME. Our findings are consistent with the view that the Gamestop event altered the culture of WSB, leading to a deterioration in investment quality that adversely affected smaller investors.

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• Campos, C., & Kearns, C. (2024). The Impact of Public School Choice: Evidence from Los Angeles’s Zones of Choice*. The Quarterly Journal of Economics, 139, 1051–1093.

  Does a school district that expands school choice provide better outcomes for students than a neighborhood-based assignment system? This article studies the Zones of Choice (ZOC) program, a school choice initiative of the Los Angeles Unified School District (LAUSD) that created small high school markets in some neighborhoods but left attendance zone boundaries in place throughout the rest of the district. We study market-level effects of choice on student achievement and college enrollment using a difference-in-differences design. Student outcomes in ZOC markets increased markedly, narrowing achievement and college enrollment gaps between ZOC neighborhoods and the rest of the district. The effects of ZOC are larger for schools exposed to more competition, supporting the notion that competition is a key channel. Demand estimates suggest families place substantial weight on schools’ academic quality, providing schools with competition-induced incentives to improve their effectiveness. The evidence demonstrates that public school choice programs have the potential to improve school quality and reduce neighborhood-based disparities in educational opportunity.

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• Chen, J., & Roth, J. (2024). Logs with Zeros? Some Problems and Solutions*. The Quarterly Journal of Economics, 139, 891–936.

  When studying an outcome Y that is weakly positive but can equal zero (e.g., earnings), researchers frequently estimate an average treatment effect (ATE) for a “log-like” transformation that behaves like log (Y) for large Y but is defined at zero (e.g., log (1 + Y), $\operatorname{arcsinh}(Y)$). We argue that ATEs for log-like transformations should not be interpreted as approximating percentage effects, since unlike a percentage, they depend on the units of the outcome. In fact, we show that if the treatment affects the extensive margin, one can obtain a treatment effect of any magnitude simply by rescaling the units of Y before taking the log-like transformation. This arbitrary unit dependence arises because an individual-level percentage effect is not well-defined for individuals whose outcome changes from zero to nonzero when receiving treatment, and the units of the outcome implicitly determine how much weight the ATE for a log-like transformation places on the extensive margin. We further establish a trilemma: when the outcome can equal zero, there is no treatment effect parameter that is an average of individual-level treatment effects, unit invariant, and point identified. We discuss several alternative approaches that may be sensible in settings with an intensive and extensive margin, including (i) expressing the ATE in levels as a percentage (e.g., using Poisson regression), (ii) explicitly calibrating the value placed on the intensive and extensive margins, and (iii) estimating separate effects for the two margins (e.g., using Lee bounds). We illustrate these approaches in three empirical applications.

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• Chetty, R., Friedman, J. N., Stepner, M., & Opportunity Insights Team. (2024). The Economic Impacts of COVID-19: Evidence from a New Public Database Built Using Private Sector Data*. The Quarterly Journal of Economics, 139, 829–889.

  We build a publicly available database that tracks economic activity in the United States at a granular level in real time using anonymized data from private companies. We report weekly statistics on consumer spending, business revenues, job postings, and employment rates disaggregated by county, sector, and income group. Using the publicly available data, we show how the COVID-19 pandemic affected the economy by analyzing heterogeneity in its effects across subgroups. High-income individuals reduced spending sharply in March 2020, particularly in sectors that require in-person interaction. This reduction in spending greatly reduced the revenues of small businesses in affluent, dense areas. Those businesses laid off many of their employees, leading to widespread job losses, especially among low-wage workers in such areas. High-wage workers experienced a V-shaped recession that lasted a few weeks, whereas low-wage workers experienced much larger, more persistent job losses. Even though consumer spending and job postings had recovered fully by December 2021, employment rates in low-wage jobs remained depressed in areas that were initially hard hit, indicating that the temporary fall in labor demand led to a persistent reduction in labor supply. Building on this diagnostic analysis, we evaluate the effects of fiscal stimulus policies designed to stem the downward spiral in economic activity. Cash stimulus payments led to sharp increases in spending early in the pandemic, but much smaller responses later in the pandemic, especially for high-income households. Real-time estimates of marginal propensities to consume provided better forecasts of the impacts of subsequent rounds of stimulus payments than historical estimates. Overall, our findings suggest that fiscal policies can stem secondary declines in consumer spending and job losses, but cannot restore full employment when the initial shock to consumer spending arises from health concerns. More broadly, our analysis demonstrates how public statistics constructed from private sector data can support many research and real-time policy analyses, providing a new tool for empirical macroeconomics.

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• Davis, J., & Gondhi, N. (2024). Learning in Financial Markets: Implications for Debt-Equity Conflicts. The Review of Financial Studies, 37, 1584–1639.

  Financial markets reveal information that firm managers can utilize when making equity value-enhancing investment decisions. However, for firms with risky debt, such investments are not necessarily socially efficient. Despite this friction, we show that learning from prices improves investment efficiency. This effect is asymmetric, however, as investors learn less about projects that decrease the riskiness of cash flows: efficiency is lower for diversifying investments than for focusing (risk-increasing) investments. This also implies that investors’ endogenous learning further attenuates risk shifting but amplifies debt overhang. Our model provides a novel channel through which learning from financial markets affects agency frictions between stakeholders.

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• de Silva, T., & Thesmar, D. (2024). Noise in Expectations: Evidence from Analyst Forecasts. The Review of Financial Studies, 37, 1494–1537.

  Analyst forecasts outperform econometric forecasts in the short run but underperform in the long run. We decompose these differences in forecasting accuracy into analysts’ information advantage, forecast bias, and forecast noise. We find that noise and bias strongly increase with forecast horizon, while analysts’ information advantage decays rapidly. A noise increase with horizon generates a mechanical reversal in the sign of the error-revision (Coibion-Gorodnichenko) regression coefficient at longer horizons, independently of over-/underreaction. A parsimonious model with bounded rationality and a noisy cognitive default matches the term structures of noise and bias jointly.

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