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

• Ang, D. (2023). The Birth of a Nation: Media and Racial Hate. American Economic Review, 113, 1424–1460.

  This paper documents the impact of popular media on racial hate by examining the first American blockbuster: 1915's The Birth of a Nation, a fictional portrayal of the KKK's founding rife with racist stereotypes. Exploiting the film's five-year "road show," I find a sharp spike in lynchings and race riots coinciding with its arrival in a county. Instrumenting for road show destinations using the location of theaters prior to the movie's release, I show that the film significantly increased local Klan support in the 1920s. Road show counties continue to experience higher rates of hate crimes and hate groups a century later.

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• Blattner, L., Farinha, L., & Rebelo, F. (2023). When Losses Turn into Loans: The Cost of Weak Banks. American Economic Review, 113, 1600–1641.

  We provide evidence that banks distort the composition of credit supply in order to comply with ratio-based capital requirements in times of economic distress. An unexpected intervention by the European Banking Authority provides a natural experiment to study how banks respond to falling below minimum required capital ratios during an economic downturn. We show that affected banks respond by cutting lending but also by reallocating credit to distressed firms with underreported loan losses. We develop a method to detect underreported losses using loan-level data. The credit reallocation leads to a reallocation of inputs across firms. We calculate that the resulting increase in input misallocation accounts for about 22 percent of the decline in productivity in Portugal in 2012.

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• Caunedo, J., Jaume, D., & Keller, E. (2023). Occupational Exposure to Capital-Embodied Technical Change. American Economic Review, 113, 1642–1685.

  We study differences in exposure to factor-biased technical change among occupations by providing the first measures of capital-embodied technical change (CETC) and of the elasticity of substitution between capital and labor at the occupational level. We document sizable occupational heterogeneity in both measures, but quantitatively, it is the heterogeneity in factor substitutability that fuels workers' exposure to CETC. In a general equilibrium model of worker sorting across occupations, CETC accounts for almost all of the observed labor reallocation in the US between 1984 and 2015. Absent occupational heterogeneity in factor substitutability, CETC accounts for only 17 percent of it.

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• Esposito, E., Rotesi, T., Saia, A., & Thoenig, M. (2023). Reconciliation Narratives: The Birth of a Nation after the US Civil War. American Economic Review, 113, 1461–1504.

  We study how the spread of the Lost Cause narrative—a revisionist and racist retelling of the US Civil War—shifted opinions and behaviors toward national reunification and racial discrimination against African Americans. Looking at screenings of The Birth of a Nation, a blockbuster movie that greatly popularized the Lost Cause after 1915, we find that the film shifted the public discourse toward a more patriotic and less divisive language, increased military enlistment, and fostered cultural convergence between former enemies. We document how the racist content of the narrative connects to reconciliation through a "common-enemy" type of argument.

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• Gaynor, M., Mehta, N., & Richards-Shubik, S. (2023). Optimal Contracting with Altruistic Agents: Medicare Payments for Dialysis Drugs. American Economic Review, 113, 1530–1571.

  We study health-care provider agency and optimal payments, considering an expensive medication for dialysis patients. Using Medicare claims data we estimate a structural model of treatment decisions, in which providers differ in their altruism and marginal costs, and this heterogeneity is unobservable to the government. In a novel application of nonlinear pricing methods, we empirically characterize the optimal contracts in this environment. The optimal contracts eliminate medically excessive dosages and reduce expenditures, resulting in approximately $300 million in annual gains from better contracting. This approach could be applied to a broad class of problems in healthcare payment policy.

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• Lopomo, G., Persico, N., & Villa, A. T. (2023). Optimal Procurement with Quality Concerns. American Economic Review, 113, 1505–1529.

  Adverse selection in procurement arises when low-cost bidders are also low-quality suppliers. We propose a mechanism called LoLA (lowball lottery auction) which, under some conditions, maximizes any combination of buyer's and social surplus, subject to incentive compatibility, in the presence of adverse selection. The LoLA features a floor price, and a reserve price. The LoLA has a dominant strategy equilibrium that, under mild conditions, is unique. In a counterfactual analysis of Italian government auctions, we compute the gain that the government could have made, had it used the optimal procurement mechanism (a LoLA), relative to a first-price auction (the adopted format).

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• Ngangoue, M. K., & Schotter, A. (2023). The Common-Probability Auction Puzzle. American Economic Review, 113, 1572–1599.

  This paper presents a puzzle in the behavior of experimental subjects in what we call common-probability auctions. In common-value auctions, uncertainty is defined over values, while in common-probability auctions, uncertainty is defined over probabilities. We find that in contrast to the substantial overbidding found in common-value auctions, bidding in strategically equivalent common-probability auctions is consistent with Nash equilibrium. To explain our results, we run treatments to identify whether this difference stems from the way subjects estimate the good's value in a competitive environment rather than the way they bid conditional on these valuations. We conclude it is the former.

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• Romer, C. D., & Romer, D. H. (2023). Presidential Address: Does Monetary Policy Matter? The Narrative Approach after 35 Years. American Economic Review, 113, 1395–1423.

  The narrative approach to macroeconomic identification uses qualitative sources, such as newspapers or government records, to provide information that can help establish causal relationships. This paper discusses the requirements for rigorous narrative analysis using fresh research on the impact of monetary policy as the focal application. We read the historical Minutes and Transcripts of Federal Reserve policymaking meetings to identify significant contractionary and expansionary changes in monetary policy not taken in response to current or prospective developments in real activity for the period 1946 to 2016. We find that such monetary shocks have large and significant effects on unemployment, output, and inflation in the expected directions. Analysis of available policy records suggests that a contractionary monetary shock likely occurred in 2022. Based on the empirical estimates of the effect of previous shocks, one would expect substantial negative impacts on real GDP and inflation in 2023 and 2024.

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• Barwick, P. J., Liu, Y., Patacchini, E., & Wu, Q. (2023). Information, Mobile Communication, and Referral Effects. American Economic Review, 113, 1170–1207.

  This paper uses the universe of cellphone records from a Chinese telecommunication provider for a northern Chinese city to examine the role of information exchange in urban labor markets. We provide the first direct evidence of increased communication among referral pairs around job changes. Information provided by social contacts mitigates information asymmetry and improves labor market performance.

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• Bernanke, B. S. (2023). Nobel Lecture: Banking, Credit, and Economic Fluctuations. American Economic Review, 113, 1143–1169.

  Credit markets, including the market for bank loans, are characterized by imperfect and asymmetric information. These informational frictions can interact with other economic forces to produce periods of credit-market stress, in which intermediation is unusually costly and households and businesses have difficulty obtaining credit. A high level of credit-market stress, as in a severe financial crisis, may in turn produce a deep and prolonged recession. I present evidence that financial distress and disrupted credit markets were important sources of the Great Depression of the 1930s and the Great Recession of 2007–2009. Changes in the state of credit markets also play a role in "garden-variety" business cycles and in the transmission of monetary policy to the economy.

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