NBER Macroeconomics Annual 2020, volume 35.

• Author: Eichenbaum, Martin
• Position: NBER Books

The NBER Macroeconomics Annual 2020 presents research by leading scholars on central issues in contemporary macroeconomics. George-Marios Angeletos, Zhen Huo, and Karthik Sastry analyze expectation formation and find that in response to business cycle shocks, expectations underreact initially but eventually overshoot. This pattern supports models with dispersed, noisy information and overextrapolation of expectations.

Esteban Rossi-Hansberg, Pierre-Daniel Sarte, and Nicholas Trachter contrast the patterns of rising aggregate firm market concentration with falling market concentration over time at the local level. Some associate rising concentration with less competition and more market power, but since most product markets are local, studying changes in local competition, as opposed to trends in aggregate competition, provides important insights.

Adam Guren, Alisdair McKay, Emi Nakamura, and Jon Steinsson develop a novel econometric procedure to recover structural parameters using cross-region variation. They apply this procedure to estimate the effect of housing wealth changes on household consumption.

Peter Klenow and Huiyu Li quantify the contribution of innovation to economic growth. They find that young firms generate roughly half of all...