Economics

This paper studies the role of foreign exchange and gold reserves in mitigating the US monetary policy spillovers to exchange rates at times of geopolitical fragmentation and de-dollarization. US dollar reserves mitigate depreciation driven by US monetary tightening, while non-dollar reserves do not. Gold reserves are also associated with smaller exchange-rate responses, though less strongly than dollar reserves, suggesting novel complementarity between dollar and gold reserves. Moreover, the estimated effects of dollar and gold reserves are concentrated in countries without swap and repo lines. These findings are consistent with recent large-scale purchases and sales of gold reserves by eme..

The emergence of wearable electroencephalography (EEG) technologies presents new opportunities to identify and quantify neural correlates of decision-making in real-time, financially consequential settings. We report a field study in which we use wearable EEG devices to record brainwave activity from professional day traders during real-world, high-stakes trading. Using these signals, we construct an established psychophysiological Engagement Index (EI), which is defined as beta wave power divided by the sum of alpha and theta wave power, and document clear spike-and-decay patterns around trade execution. Linking EI dynamics to trading performance, we find that more successful trades are pre..

Rising elderly life expectancy is a well-known source of fiscal pressure on Social Security and Medicare – but how have declining mortality and morbidity affected the two programs’ relative finances? Using nearly three decades of Medicare Current Beneficiary Survey data (1992-2019), we estimate that these demographic changes raised expected lifetime Social Security spending by over twice as much as expected lifetime Medicare spending: 14% compared to 6%. The slower growth of elderly lifetime health care spending than annuity spending reflects two features of how longevity has increased: the additional 2.4 years of remaining life expectancy were entirely healthy – free of physical or co..

Although use of generative AI tools has quickly become widespread in education settings, emerging evidence suggests that effects on learning will depend on how that use is supported and guided. This paper reports findings from an original national survey of K-12 school principals designed to measure institutional integration of AI in schools through policies, teacher training, guidance for student use, leadership engagement, and the availability of AI-enabled tools. We find that AI use has spread rapidly across schools, largely as a productivity aid. Students mainly use AI for homework help and writing, while educators primarily use it for lesson planning and administrative tasks. The develo..

Product and service quality is fundamental to firm value creation, yet it is well recognized as difficult to observe ex ante. Existing quality proxies are limited in coverage, lack cross-firm comparability, and primarily rely on lagging indicators that capture product or service failures only after they materialize. Exploiting employees’ informational advantage as informed insiders and firsthand observers of firms’ internal operations, we develop and validate a novel, forward-looking measure of firm-year-level product and service quality using over 4.3 million employee reviews on Glassdoor. Leveraging machine learning models trained on a subset of firms with third-party customer satisfac..

This paper treats frontier investment as staged discovery. Firms invest through sequences of costly inquiry stages before deciding whether and how to realize value. At each stage, a firm may sharpen its diagnostic understanding, choose what question to ask, embody that question in a costly action, and interpret the answer that action produces. The answer changes what the firm knows, what it can do next, and how costly future inquiry will be. Successful histories can also carry over to later related problems, making the firm a better learner beyond the current investment path. The paper calls the resulting asset planning capital in firm form. Planning capital is the accumulated diagnostic und..

Experimenter demand effects arise when participants in an experiment or survey distort their behavior in a misguided attempt to please the experimenter by confirming their research hypothesis. Experimental economists have taken the threat of demand effects seriously and have developed an array of best practices to mitigate their influence, as well as bounding techniques to assess their potential impact on inference. We provide an overview of these techniques and summarize recent empirical assessments of the potential threat of experimenter demand. Our main message is that good design is normally sufficient to address demand concerns, and that bounding approaches work well when concerns remai..

Consider a society that faces uncertainty about a payoff-relevant state and wants to train students to make correct decisions. In educational institutions, students learn from their teachers, but they also get outside information, and later learn from peers. We show that privately Bayesian actions need not be optimal inputs into social learning: when students' actions reflect teacher-side information that is correlated across peers, observing many such actions can give this information excessive social weight. A social planner may therefore optimally reduce the precision of instruction, inducing students to rely more on outside information before their actions become signals for others, and ..

We analyze how social-planner insurers split cost-sharing between consumers and firms (e.g. patients and doctors, or drivers and car mechanics). With no contracting frictions, firm cost-sharing can replace consumer cost-sharing other than “visit copays.” Optimal firm contracts depend on the marginal rate of substitution between consumer and firm cost-sharing. For Medicare physician services, paying physicians more up front but less as spending increases reduces risk for both patients and providers; in our calibration, net benefits are twice those from eliminating Medigap externality. For prescription drugs, a dollar of physician paperwork costs is 45–110 times more impactful than a dol..

Artificial intelligence (AI) reshapes workers’ comparative advantage by altering the tasks they perform and the skills those tasks require. We develop a dynamic task-based model to quantify the general-equilibrium effects of task-specific technical change. Workers have multidimensional skills, choose occupations, and accumulate skills on the job; occupations combine tasks, and productivity depends on how workers’ skills match task requirements. We develop a computationally efficient procedure to estimate the model using panel data and a new database of task-level skill requirements. We apply the model to AI, allowing it to augment, automate, and simplify tasks. We find that AI narrows wa..

Standard measures of inflation, such as the Consumer Price Index (CPI), are designed to measure changes in the cost of living, not how households perceive price changes under limited attention and imperfect information. This paper introduces Perceived Inflation (PI), an attention-weighted inflation measure derived from a model in which households allocate attention across goods and observe noisy price signals. I construct monthly PI using disaggregated CPI data and attention proxies based on price salience, volatility, media mentions, and search behavior. The resulting PI series is highly correlated with CPI inflation but exhibits greater short-run volatility, especially during the Global Fi..