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

• Aguiar, M., & Amador, M. (2020). Self-Fulfilling Debt Dilution: Maturity and Multiplicity in Debt Models. American Economic Review, 110, 2783–2818.

  We establish that creditor beliefs regarding future borrowing can be self-fulfilling, leading to multiple equilibria with markedly different debt accumulation patterns. We characterize such indeterminacy in the Eaton-Gersovitz sovereign debt model augmented with long maturity bonds. Two necessary conditions for the multiplicity are (i) the government is more impatient than foreign creditors, and (ii) there are deadweight losses from default. The multiplicity is dynamic and stems from the self-fulfilling beliefs of how future creditors will price bonds; long maturity bonds are therefore a crucial component of the multiplicity. We introduce a third party with deep pockets to discuss the policy implications of this source of multiplicity and identify the potentially perverse consequences of traditional "lender of last resort" policies.

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• Bach, L., Calvet, L. E., & Sodini, P. (2020). Rich Pickings? Risk, Return, and Skill in Household Wealth. American Economic Review, 110, 2703–2747.

  We investigate wealth returns on an administrative panel containing the disaggregated balance sheets of Swedish residents. The expected return on household net wealth is strongly persistent, determined primarily by systematic risk, and increasing in net worth, exceeding the risk-free rate by the size of the equity premium for households in the top 0.01 percent. Idiosyncratic risk is transitory but generates substantial long-term dispersion in returns in top brackets. Systematic and idiosyncratic risk both drive the cross-sectional distribution of the geometric average return over a generation. Furthermore, wealth returns explain most of the historical increase in top wealth shares.

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• Bordalo, P., Gennaioli, N., Ma, Y., & Shleifer, A. (2020). Overreaction in Macroeconomic Expectations. American Economic Review, 110, 2748–2782.

  We study the rationality of individual and consensus forecasts of macroeconomic and financial variables using the methodology of Coibion and Gorodnichenko (2015), who examine predictability of forecast errors from forecast revisions. We find that individual forecasters typically overreact to news, while consensus forecasts underreact relative to full-information rational expectations. We reconcile these findings within a diagnostic expectations version of a dispersed information learning model. Structural estimation indicates that departures from Bayesian updating in the form of diagnostic overreaction capture important variation in forecast biases across different series, yielding a belief distortion parameter similar to estimates obtained in other settings.

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• D’HaultfÅ“uille, X., & de Chaisemartin, C. (2020). Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects. American Economic Review, 110, 2964–2996.

  Linear regressions with period and group fixed effects are widely used to estimate treatment effects. We show that they estimate weighted sums of the average treatment effects (ATE) in each group and period, with weights that may be negative. Due to the negative weights, the linear regression coefficient may for instance be negative while all the ATEs are positive. We propose another estimator that solves this issue. In the two applications we revisit, it is significantly different from the linear regression estimator.

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• Gyöngyösi, G., & Verner, E. (2020). Household Debt Revaluation and the Real Economy: Evidence from a Foreign Currency Debt Crisis. American Economic Review, 110, 2667–2702.

  We examine the consequences of a sudden increase in household debt burdens by exploiting variation in exposure to household foreign currency debt during Hungary's late-2008 currency crisis. The revaluation of debt burdens causes higher default rates and a collapse in spending. These responses lead to a worse local recession, driven by a decline in local demand, and negative spillover effects on nearby borrowers without foreign currency debt. The estimates translate into an output multiplier on higher debt service of 1.67. The impact of debt revaluation is particularly severe when foreign currency debt is concentrated on household, rather than firm, balance sheets.

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• Jones, C. I., & Tonetti, C. (2020). Nonrivalry and the Economics of Data. American Economic Review, 110, 2819–2858.

  Data is nonrival: a person's location history, medical records, and driving data can be used by many firms simultaneously. Nonrivalry leads to increasing returns. As a result, there may be social gains to data being used broadly across firms, even in the presence of privacy considerations. Fearing creative destruction, firms may choose to hoard their data, leading to the inefficient use of nonrival data. Giving data property rights to consumers can generate allocations that are close to optimal. Consumers balance their concerns for privacy against the economic gains that come from selling data broadly.

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• Jones, J. B., & Pratap, S. (2020). An Estimated Structural Model of Entrepreneurial Behavior. American Economic Review, 110, 2859–2898.

  Using a rich panel of owner-operated New York dairy farms, we provide new evidence on entrepreneurial behavior. We formulate a dynamic model of farms facing uninsured risks and financial constraints. Farmers derive nonpecuniary benefits from operating their businesses. We estimate the model via simulated minimum distance, matching both production and financial data. We find that financial factors and nonpecuniary benefits are of first-order importance. Collateral constraints and liquidity restrictions inhibit borrowing and the accumulation of capital, especially among high-productivity firms seeking to expand. The nonpecuniary benefits to farming are large and keep small, low-productivity farms in business. Although farmers are risk averse, eliminating uninsured production risk has only modest effects on capital and output.

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• Kojima, F., Sun, N., & Yu, N. N. (2020). Job Matching under Constraints. American Economic Review, 110, 2935–2947.

  Studying job matching in a Kelso-Crawford framework, we consider arbitrary constraints imposed on sets of doctors that a hospital can hire. We characterize all constraints that preserve the substitutes condition (for all revenue functions that satisfy the substitutes condition), a critical condition on hospitals' revenue functions for well-behaved competitive equilibria. A constraint preserves the substitutes condition if and only if it is a "generalized interval constraint," which specifies the minimum and maximum numbers of hired doctors, forces some hires, and forbids others. Additionally, "generalized polyhedral constraints" are precisely those that preserve the substitutes condition for all "group separable" revenue functions.

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• Lunsford, K. G. (2020). Policy Language and Information Effects in the Early Days of Federal Reserve Forward Guidance. American Economic Review, 110, 2899–2934.

  I show that the nature of the Federal Open Market Committee's (FOMC's) forward guidance language shapes the private sector's responses to monetary policy statements. From February 2000 to June 2003, the FOMC only gave forward guidance about economic outlook risks, and a decrease in the expected federal funds rate path caused stock prices to fall, GDP growth forecasts to fall, and the unemployment rate to rise. From August 2003 to May 2006, the FOMC added forward guidance about policy inclinations, and a decrease in the expected federal funds rate path had the opposite effects. These results suggest that forward guidance that emphasizes economic outlook risks causes stronger information effects than forward guidance that emphasizes policy inclinations.

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• Ravid, D. (2020). Ultimatum Bargaining with Rational Inattention. American Economic Review, 110, 2948–2963.

  A seller bargains with a rationally inattentive buyer (Sims 2003) over a good of random quality. After observing quality, the seller makes a take-it-or-leave-it offer. The buyer pays attention to the seller's product and offer at a cost proportional to expected entropy reduction. Because attention is free off-path, multiple equilibria emerge, many of which are efficient. A trembling-hand-like refinement (Selten 1975) rules out efficiency, delivering complete disagreement when attention is expensive and a unique equilibrium with trade when attention is cheap. In this equilibrium, the buyer overpays for low-quality goods, underpays for high-quality goods, and earns a strictly positive payoff.

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