Macroeconomics

In this essay, we criticize how the performativity thesis, as described and exemplified in Do Economists Make Markets, has focused primarily on the field of economics generally and business school–based financial economics consequently. By doing so the performativity literature has ignored whether, when, and how financial economics outperforms, or might be outperformed by, other business school sciences, such as management.

People choose where to live and how much to invest in housing. Traditionally, the first decision has been the domain of spatial economics, while the second has been analyzed in finance. Spatial asset pricing is an attempt to combine equilibrium concepts from both disciplines. In the finance context, we show how spatial decisions can be framed as an expanded portfolio problem. Within spatial economics, we identify the consequences of hedging motives for location decisions.

Until fairly recently, the main approach to getting business to respond to climate change has been top-down efforts to regulate emissions and enact various forms of "carbon pricing." The aim of such efforts has been to make businesses "internalize" the costs associated with greenhouse gas (GHG) emissions. Governments are expected to set the environmental protection rules for companies in their respective countries, and markets are expected to adjust to the new regulations and carbon prices.

Sialkot, Pakistan is the world center of hand-stitched soccer-ball production, home to roughly 130 firms, which produce for all major brands (Atkin et al 2015a, 2015b). At first blush, the existence of this cluster is puzzling. Pakistanis’ sporting passion is cricket; soccer has always been of marginal interest in the country. One might be tempted to dismiss the existence of a cluster where there is no apparent local demand as an anomaly, curious in itself but not indicative of a deeper pattern. But the phenomenon is not uncommon.

The classic integrability problem asks (i) what conditions guarantee that demand functions can be rationalized by a well-behaved utility function and (ii) if such a utility exists, how can it be recovered. Hurwicz and Uzawa (1971) provided answers to both questions. However for the popular case of changing tastes, as represented by a sequence of non-nested utilities, the Hurwicz and Uzawa conditions fail to hold in general. Following Strotz (1956), an individual can determine her dynamic demands via a naive or sophisticated solution technique.

This article reviews the literature on teacher value-added. Although value-added models have been used to measure the contributions of numerous inputs to educational production, their application toward identifying the contributions of individual teachers has been particularly contentious. Our review covers articles on topics ranging from technical aspects of model design to the role that value-added can play in informing teacher evaluations in practice, highlighting areas of consensus and disagreement in the literature.

We study the information flows that arise among a set of agents with local knowledge and directed payoff interactions, which differ among pairs of agents. First, we study the equilibrium of a game where, before making decisions, agents can invest in pairwise active communication (speaking) and pairwise passive communication (listening). This leads to a full characterization of information and influence flows.

Although skilled return migrants are structurally positioned as cross-border brokers to conduct knowledge transfer from abroad to their home countries, they do not systematically do so. Using an original dataset of 4,183 former J1 Visa holders—all of whom worked in the U.S.—from 81 different countries, I argue that returnees' knowledge transfer success depends on their embeddedness in their home and host country workplaces and the evaluation of the knowledge recipients in their home country organizations.

We consider a broad class of dynamic portfolio optimization problems that allow for complex models of return predictability, transaction costs, trading constraints, and risk considerations. Determining an optimal policy in this general setting is almost always intractable. We propose a class of linear rebalancing rules and describe an efficient computational procedure to optimize with this class. We illustrate this method in the context of portfolio execution and show that it achieves near optimal performance.