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

• Buchak, G., Matvos, G., Piskorski, T., & Seru, A. (2018). Fintech Regulatory Arbitrage and the Rise of Shadow Banks. Journal of Financial Economics, 130, 453–483.

  Shadow bank market share in residential mortgage origination nearly doubled from 2007 to 2015, with particularly dramatic growth among online “fintech” lenders. We study how two forces, regulatory differences and technological advantages, contributed to this growth. Difference in difference tests exploiting geographical heterogeneity induced by four specific increases in regulatory burden–capital requirements, mortgage servicing rights, mortgage-related lawsuits, and the movement of supervision to Office of Comptroller and Currency following closure of the Office of Thrift Supervision–all reveal that traditional banks contracted in markets where they faced more regulatory constraints; shadow banks partially filled these gaps. Relative to other shadow banks, fintech lenders serve more creditworthy borrowers and are more active in the refinancing market. Fintech lenders charge a premium of 14–16 basis points and appear to provide convenience rather than cost savings to borrowers. They seem to use different information to set interest rates relative to other lenders. A quantitative model of mortgage lending suggests that regulation accounts for roughly 60% of shadow bank growth, while technology accounts for roughly 30%.

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• Casaburi, L., & Willis, J. (2018). Time versus State in Insurance: Experimental Evidence from Contract Farming in Kenya. American Economic Review, 108, 3778–3813.

  The gains from insurance arise from the transfer of income across states. Yet, by requiring that the premium be paid upfront, standard insurance products also transfer income across time. We show that this intertemporal transfer can help explain low insurance demand, especially among the poor, and in a randomized control trial in Kenya we test a crop insurance product which removes it. The product is interlinked with a contract farming scheme: as with other inputs, the buyer of the crop offers the insurance and deducts the premium from farmer revenues at harvest time. The take-up rate for pay-at-harvest insurance is 72 percent, compared to 5 percent for the standard pay-up-front contract, and the difference is largest among poorer farmers. Additional experiments and outcomes provide evidence on the role of liquidity constraints, present bias, and counterparty risk, and find that enabling farmers to commit to pay the premium just one month later increases demand by 21 percentage points.

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• Chen, K., Ren, J., & Zha, T. (2018). The Nexus of Monetary Policy and Shadow Banking in China. American Economic Review, 108, 3891–3936.

  We study how monetary policy in China influences banks' shadow banking activities. We develop and estimate the endogenously switching monetary policy rule that is based on institutional facts and at the same time tractable in the spirit of Taylor (1993). This development, along with two newly constructed micro banking datasets, enables us to establish the following empirical evidence. Contractionary monetary policy during 2009–2015 caused shadow banking loans to rise rapidly, offsetting the expected decline of traditional bank loans and hampering the effectiveness of monetary policy on total bank credit. We advance a theoretical explanation of our empirical findings.

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• Choi, A. H., & Spier, K. E. (2018). Taking a Financial Position in Your Opponent in Litigation. American Economic Review, 108, 3626–3650.

  Before filing suit, a plaintiff can take a financial position in a defendant firm. A short position benefits the plaintiff by transforming a negative expected-value claim into a positive expected-value one and by enhancing the claim's settlement value. If the capital market is less than strong-form efficient, the plaintiff also benefits directly from the decline in the defendant's stock price. When the defendant is privately informed about the case's merits, bargaining failures can arise. While aggressive short-selling benefits the plaintiff at the expense of the defendant, moderate levels of short-selling can benefit the defendant and raise the settlement rate.

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• Dubois, P., & Lasio, L. (2018). Identifying Industry Margins with Price Constraints: Structural Estimation on Pharmaceuticals. American Economic Review, 108, 3685–3724.

  We develop a structural model to investigate the effects of pharmaceutical price regulation on demand and on manufacturers' price-setting behavior in France. We estimate price-cost margins in a regulated market with price constraints and infer whether these constraints are binding, exploiting cost restrictions across drugs, which come from observing the same drugs in potentially price-constrained markets (France) and in markets where prices are unregulated (US and Germany). Our counterfactual simulations suggest that price constraints generated modest savings for anti-ulcer drugs in 2003–2013 (2 percent of total expenses), relative to a free pricing scenario, and shifted consumption from generic to branded drugs.

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• Fudenberg, D., Strack, P., & Strzalecki, T. (2018). Speed, Accuracy, and the Optimal Timing of Choices. American Economic Review, 108, 3651–3684.

  We model the joint distribution of choice probabilities and decision times in binary decisions as the solution to a problem of optimal sequential sampling, where the agent is uncertain of the utility of each action and pays a constant cost per unit time for gathering information. We show that choices are more likely to be correct when the agent chooses to decide quickly provided that the agent's prior beliefs are correct. This better matches the observed correlation between decision time and choice probability than does the classical drift-diffusion model (DDM), where the agent knows the utility difference between the choices.

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• Hamilton, B. H., Jungheim, E., McManus, B., & Pantano, J. (2018). Health Care Access, Costs, and Treatment Dynamics: Evidence from In Vitro Fertilization. American Economic Review, 108, 3725–3777.

  We study public policies designed to improve access and reduce costs for In Vitro Fertilization (IVF). High out-of-pocket prices can deter potential patients from IVF, while active patients have an incentive to risk costly high-order pregnancies to improve their odds of treatment success. We analyze IVF's rich choice structure by estimating a dynamic model of patients' choices within and across treatments. Policy simulations show that insurance mandates for treatment or hard limits on treatment aggressiveness can improve access or costs, but not both. Insurance plus price-based incentives against risky treatment, however, can together improve patient welfare and reduce medical costs.

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• Hastings, J., & Shapiro, J. M. (2018). How Are SNAP Benefits Spent? Evidence from a Retail Panel. American Economic Review, 108, 3493–3540.

  We use a novel retail panel with detailed transaction records to study the effect of the Supplemental Nutrition Assistance Program (SNAP) on house-hold spending. We use administrative data to motivate three approaches to causal inference. The marginal propensity to consume SNAP-eligible food (MPCF) out of SNAP benefits is 0.5 to 0.6. The MPCF out of cash is much smaller. These patterns obtain even for households for whom SNAP benefits are economically equivalent to cash because their benefits are below their food spending. Using a semiparametric framework, we reject the hypothesis that households respect the fungibility of money. A model with mental accounting can match the facts.

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• Jensen, R., & Miller, N. H. (2018). Market Integration, Demand, and the Growth of Firms: Evidence from a Natural Experiment in India. American Economic Review, 108, 3583–3625.

  In many developing countries, the average firm is small, does not grow and has low productivity. Lack of market integration and limited information on non-local products often leave consumers unaware of the prices and quality of non-local firms. They therefore mostly buy locally, limiting firms' potential market size (and competition). We explore this hypothesis using a natural experiment in the Kerala boat-building industry. As consumers learn more about non-local builders, high quality builders gain market share and grow, while low quality firms exit. Aggregate quality increases, as does labor specialization, and average production costs decrease. Finally, quality-adjusted consumer prices decline.

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• Monte, F., Redding, S. J., & Rossi-Hansberg, E. (2018). Commuting, Migration, and Local Employment Elasticities. American Economic Review, 108, 3855–3890.

  We provide theory and evidence that the elasticity of local employment to a labor demand shock is heterogeneous depending on the commuting openness of the local labor market. We develop a quantitative general equilibrium model that incorporates spatial linkages in goods markets (trade) and factor markets (commuting and migration). We quantify this model to match the observed gravity equation relationships for trade and commuting. We find that empirically-observed reductions in commuting costs generate welfare gains of around 3.3 percent. We provide separate quasi-experimental evidence in support of the model's predictions using the location decisions of million dollar plants.

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