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

• Feenstra, R. C., Inklaar, R., & Timmer, M. P. (2015). The Next Generation of the Penn World Table. American Economic Review, 105, 3150–3182.

  We describe the theory and practice of real GDP comparisons across countries and over time. Version 8 of the Penn World Table expands on previous versions in three respects. First, in addition to comparisons of living standards using components of real GDP on the expenditure side, we provide a measure of productive capacity, called real GDP on the output side. Second, growth rates are benchmarked to multiple years of cross-country price data so they are less sensitive to new benchmark data. Third, data on capital stocks and productivity are (re)introduced. Applications including the Balassa-Samuelson effect and development accounting are discussed. (JEL C43, C82, E01, E23, I31, O47)

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• Hartline, J. D., & Lucier, B. (2015). Non-optimal Mechanism Design. American Economic Review, 105, 3102–3124.

  The optimal allocation of resources in complex environments—like allocation of dynamic wireless spectrum, cloud computing services, and Internet advertising—is computationally challenging even given the true preferences of the participants. In the theory and practice of optimization in complex environments, a wide variety of special and general purpose algorithms have been developed; these algorithms produce outcomes that are satisfactory but not generally optimal or incentive compatible. This paper develops a very simple approach for converting any, potentially non-optimal, algorithm for optimization given the true participant preferences, into a Bayesian incentive compatible mechanism that weakly improves social welfare and revenue. (JEL D82, H82, L82)

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• Kaas, L., & Kircher, P. (2015). Efficient Firm Dynamics in a Frictional Labor Market. American Economic Review, 105, 3030–3060.

  We develop and analyze a labor market model in which heterogeneousfirms operate under decreasing returns and compete for labor by posting long-term contracts. Firms achieve faster growth by offering higher lifetime wages, which allows them to fill vacancies with higher probability, consistent with recent empirical findings. The model also captures several other regularities about firm size, job flows, and pay, and generates sluggish aggregate dynamics of labor market variables. In contrast to existing bargaining models with large firms, efficiency obtains and the model allows a tractable characterization over the business cycle. (JEL E24, J64, L11)

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• Low, H., & Pistaferri, L. (2015). Disability Insurance and the Dynamics of the Incentive Insurance Trade-Off. American Economic Review, 105, 2986–3029.

  We provide a life-cycle framework for comparing insurance and disincentive effects of disability benefits. The risks that individuals face and the parameters of the Disability Insurance (DI) program are estimated from consumption, health, disability insurance, and wage data. We characterize the effects of disability insurance and study how policy reforms impact behavior and welfare. DI features high rejection rates of disabled applicants and some acceptance of healthy applicants. Despite worse incentives, welfare increases as programs become less strict or generosity increases. Disability insurance interacts with welfare programs: making unconditional means-tested programs more generous improves disability insurance targeting and increases welfare. (JEL D14, J24, J65)

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• Martin, I. W. R., & Pindyck, R. S. (2015). Averting Catastrophes: The Strange Economics of Scylla and Charybdis. American Economic Review, 105, 2947–2985.

  Faced with numerous potential catastrophes—nuclear and bioterrorism, mega-viruses, climate change, and others—which should society attempt to avert? A policy to avert one catastrophe considered in isolation might be evaluated in cost-benefit terms. But because society faces multiple catastrophes, simple cost-benefit analysis fails: even if the benefit of averting each one exceeds the cost, we should not necessarily avert them all. We explore the policy interdependence of catastrophic events, and develop a rule for determining which catastrophes should be averted and which should not. (JEL D61, Q51, Q54)

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• Aguiar, M., & Bils, M. (2015). Has Consumption Inequality Mirrored Income Inequality? American Economic Review, 105, 2725–2756.

  We revisit to what extent the increase in income inequality since 1980 was mirrored by consumption inequality. We do so by constructing an alternative measure of consumption expenditure using a demand system to correct for systematic measurement error in the Consumer Expenditure Survey. Our estimation exploits the relative expenditure of high- and low-income households on luxuries versus necessities. This double differencing corrects for measurement error that can vary over time by good and income. We find consumption inequality tracked income inequality much more closely than estimated by direct responses on expenditures. (JEL D31, D63, E21)

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• Bernheim, B. D., Fradkin, A., & Popov, I. (2015). The Welfare Economics of Default Options in 401(k) Plans. American Economic Review, 105, 2798–2837.

  Default contribution rates for 401(k) pension plans powerfully influence choices. Potential causes include opt-out costs, procrastination, inattention, and psychological anchoring. Using realistically parameterized models, we show how the optimal default, the magnitude of the welfare effects, and the degree of normative ambiguity depend on the behavioral model, the scope of the choice domain deemed welfare-relevant, the use of penalties for passive choice, and other 401(k) plan features. While results are theory-specific, our analysis provides reasonably robust justifications for setting the default either at the highest contribution rate matched by the employer or—contrary to common wisdom—at zero. (JEL D14, D91, J26, J32)

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• Breitmoser, Y. (2015). Cooperation, but No Reciprocity: Individual Strategies in the Repeated Prisoner’s Dilemma. American Economic Review, 105, 2882–2910.

  In the repeated prisoner's dilemma, predictions are notoriously difficult. Recently, however, Blonski, Ockenfels, and Spagnolo (2011)—henceforth, BOS‐showed that experimental subjects predictably cooperate when the discount factor exceeds a particular threshold. I analyze individual strategies in four recent experiments to examine whether strategies are predictable, too. Behavior is well summarized by "Semi-Grim" strategies: cooperate after mutual cooperation, defect after mutual defection, randomize otherwise. This holds both in aggregate and individually, and it explains the BOS-threshold: Semi-Grim equilibria appear as the discount factor crosses this threshold, and then, subjects start cooperating in round 1 and switch to Semi-Grim in continuation play. (JEL C72, C73, C92, D12)

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• Coeurdacier, N., Guibaud, S., & Jin, K. (2015). Credit Constraints and Growth in a Global Economy. American Economic Review, 105, 2838–2881.

  We show that in an open-economy OLG model, the interaction between growth differentials and household credit constraints—more severe in fast-growing countries—can explain three prominent global trends: a divergence in private saving rates between advanced and emerging economies, large net capital outflows from the latter, and a sustained decline in the world interest rate. Micro-level evidence on the evolution of age-saving profiles in the US and China corroborates our mechanism. Quantitatively, our model explains about a third of the divergence in aggregate saving rates, and a significant portion of the variations in age-saving profiles across countries and over time. (JEL E21, E22, F21, F32, F41, O16, P24)

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• Duflo, E., Dupas, P., & Kremer, M. (2015). Education, HIV, and Early Fertility: Experimental Evidence from Kenya. American Economic Review, 105, 2757–2797.

  A seven-year randomized evaluation suggests education subsidies reduce adolescent girls' dropout, pregnancy, and marriage but not sexually transmitted infection (STI). The government's HIV curriculum, which stresses abstinence until marriage, does not reduce pregnancy or STI. Both programs combined reduce STI more, but cut dropout and pregnancy less, than education subsidies alone. These results are inconsistent with a model of schooling and sexual behavior in which both pregnancy and STI are determined by one factor (unprotected sex), but consistent with a two-factor model in which choices between committed and casual relationships also affect these outcomes. (JEL I12, I18, I21, J13, J16, O15)

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