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

• Conconi, P., García-Santana, M., Puccio, L., & Venturini, R. (2018). From Final Goods to Inputs: The Protectionist Effect of Rules of Origin. American Economic Review, 108, 2335–2365.

  Recent decades have witnessed a surge of trade in intermediate goods and a proliferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those originating from third countries. We focus on the North American Free Trade Agreement (NAFTA), the world's largest FTA, and construct a unique dataset that allows us to map the input-output linkages in its RoO. Exploiting cross-product and cross-country variation in treatment over time, we show that NAFTA RoO led to a sizable reduction in imports of intermediate goods from third countries relative to NAFTA partners.

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• Fetter, D. K., & Lockwood, L. M. (2018). Government Old-Age Support and Labor Supply: Evidence from the Old Age Assistance Program. American Economic Review, 108, 2174–2211.

  Many government programs transfer resources to older people and implicitly or explicitly tax their labor. We shed new light on the labor supply and welfare effects of such programs by investigating the Old Age Assistance Program (OAA). Exploiting the large differences in OAA programs across states and Census data on the entire US population in 1940, we find that OAA reduced the labor force participation rate among men aged 65-74 by 8.5 percentage points, more than one-half of its 1930-1940 decline, but that OAA's implicit taxation of earnings imposed only small welfare costs on recipients.

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• Gavazza, A., Mongey, S., & Violante, G. L. (2018). Aggregate Recruiting Intensity. American Economic Review, 108, 2088–2127.

  We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economy-wide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable procyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness.

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• Halac, M., & Yared, P. (2018). Fiscal Rules and Discretion in a World Economy. American Economic Review, 108, 2305–2334.

  Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules, chosen jointly by a group of countries, to uncoordinated rules. If governments' present bias is small, coordinated rules are tighter than uncoordinated rules: individual countries do not internalize the redistributive effect of interest rates. However, if the bias is large, coordinated rules are slacker: countries do not internalize the disciplining effect of interest rates. Surplus limits enhance welfare, and increased savings by some countries or outside economies can hurt the rest.

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• Kolesár, M., & Rothe, C. (2018). Inference in Regression Discontinuity Designs with a Discrete Running Variable. American Economic Review, 108, 2277–2304.

  We consider inference in regression discontinuity designs when the running variable only takes a moderate number of distinct values. In particular, we study the common practice of using confidence intervals (CIs) based on standard errors that are clustered by the running variable as a means to make inference robust to model misspecification (Lee and Card 2008). We derive theoretical results and present simulation and empirical evidence showing that these CIs do not guard against model misspecification, and that they have poor coverage properties. We therefore recommend against using these CIs in practice. We instead propose two alternative CIs with guaranteed coverage properties under easily interpretable restrictions on the conditional expectation function.

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• Kuehn, L.-A., Petrosky-Nadeau, N., & Zhang, L. (2018). Endogenous Disasters. American Economic Review, 108, 2212–2245.

  Market economies are intrinsically unstable. The standard search model of equilibrium unemployment, once solved accurately with a globally nonlinear algorithm, gives rise endogenously to rare disasters. Intuitively, in the presence of cumulatively large negative shocks, inertial wages remain relatively high, and reduce profits. The marginal costs of hiring run into downward rigidity, which stems from the trading externality of the matching process, and fail to decline relative to profits. Inertial wages and rigid hiring costs combine to stifle job creation flows, depressing the economy into disasters. The disaster dynamics are robust to extensions to home production, capital accumulation, and recursive utility.

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• Plantin, G., & Tirole, J. (2018). Marking to Market versus Taking to Market. American Economic Review, 108, 2246–2276.

  Building on the idea that accounting matters for corporate governance, this paper studies the equilibrium interaction between the measurement rules that firms find privately optimal, firms' governance, and the liquidity in the secondary market for their assets. This equilibrium approach reveals an excessive use of market-value accounting: corporate performance measures rely excessively on the information generated by other firms' asset sales and insufficiently on the realization of a firm's own capital gains. This dries up market liquidity and reduces the informativeness of price signals, thereby making it more costly for firms to overcome their agency problems.

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• Ulyssea, G. (2018). Firms, Informality, and Development: Theory and Evidence from Brazil. American Economic Review, 108, 2015–2047.

  This paper develops and estimates an equilibrium model where heterogeneous firms can exploit two margins of informality: (i) not register their business, the extensive margin; and (ii) hire workers "off the books," the intensive margin. The model encompasses the main competing frameworks for understanding informality and provides a natural setting to infer their empirical relevance. The counterfactual analysis shows that once the intensive margin is accounted for, firm and labor informality need not move in the same direction as a result of policy changes. Lower informality can be, but is not necessarily associated with higher output, TFP, or welfare.

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• Vieider, F. M. (2018). Violence and Risk Preference: Experimental Evidence from Afghanistan: Comment. American Economic Review, 108, 2366–2382.

  In this comment on Callen et al. (2014), I revisit recent evidence uncovering a "preference for certainty" in violation of dominant normative and descriptive theories of decision-making under risk. I show that the empirical findings are potentially confounded by systematic noise. I then develop choice lists that allow me to disentangle these different explanations. Experimental results obtained with these lists reject explanations based on a preference for certainty in favor of explanations based on random choice. From a theoretical point of view, the levels of risk aversion detected in the choice list involving certainty can be accounted for by prospect theory through reference dependence activated by salient outcomes.

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• Amior, M., & Manning, A. (2018). The Persistence of Local Joblessness. American Economic Review, 108, 1942–1970.

  Differences in employment-population ratios across US commuting zones have persisted for many decades. We claim these disparities represent real gaps in economic opportunity for individuals of fixed characteristics. These gaps persist despite a strong migratory response, and we attribute this to high persistence in labor demand shocks. These trends generate a "race" between local employment and population: population always lags behind employment, yielding persistent deviations in employment rates. Methodologically, we argue the employment rate can serve as a sufficient statistic for local well-being; and we model population and employment dynamics using an error correction mechanism, which explicitly allows for disequilibrium.

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