Research

Dynamic decisions are pivotal to economic policy making. We show how existing evidence from randomized control trials can be utilized to guide personalized decisions in challenging dynamic environments with constraints such as limited budget or queues. Recent developments in reinforcement learning make it possible to solve many realistically complex settings for the first time. We allow for restricted policy functions and prove that their regret decays at rate n^(-0.5) , the same as in the static case. We illustrate our methods with an application to job training. The approach scales to a wide range of important problems faced by policy makers.

We use methods from natural language processing and machine learning to characterize the innovative content of patents. We elaborate the concept of widening innovations, which are patents whose textual content is different from existing patents at the time when they are filed and similar to patents subsequently filed. The term “widening'' reflects the idea that these patents extend knowledge in a novel way and spur innovation. The computations of patents' similarities rely on numerical representations of the textual content of patents. We show that widening patents have higher citations and the firms owning them make higher profits and grow faster relative to other firms, although causality between filing such a patent and firms' performance cannot be established. Unsurprisingly, many widening patents stem from the IT revolution, a field near-non-existent in the 1980s which became predominant in the innovation landscape. 

How do political careers relate to family networks? We address this question using a novel dataset assembled from various sources and combining information on the political careers of British MPs with information about the family trees of the British aristocracy. Our data span two centuries (1832-2022) and document the evolution of backgrounds of British MPs over time, their social origin (in particular whether aristocratic or not), education (university and school attended), profession and political experience. Using information on family trees we can then calculate the centrality of those MPs who are part of the aristocratic network and assess the role of network centrality in election and career progression.

I introduce a simple mechanism through which perpetual fluctuations in aggregate output can result endogenously. Individuals share sentiments on a network similarly to diseases in models of disease transmission. The sentiment that is in line with current movements in output, i.e. optimism if output is rising and pessimism if output is declining, is relatively more infectious. Consumption of optimistic consumers is biased upwards and consumption of pessimistic consumers downwards. With pricing frictions, the resulting changes in aggregate demand change aggregate output. In turn, however, changes in aggregate output change relative infection probabilities. The interplay of the two forces creates a feedback mechanism with recurring waves of optimism and pessimism. Fluctuations in output are an inherent feature of this economy. With very small real i.i.d. disturbances, fluctuations become irregular. While the mechanism is more general, it is illustrated in a stylised behavioural New Keynesian model.