Fall 2025 Journal of Economic Perspectives Freely Available Online

I have been the Managing Editor of the Journal of Economic Perspectives since the first issue in Summer 1987. The JEP is published by the American Economic Association, which decided back in 2011–to my delight–that the journal would be freely available online, from the current issue all the way back to the first issue. You can download individual articles or entire issues, and it is available in various e-reader formats, too. Here, I’ll start with the Table of Contents for the just-released Fall 2025 issue, which in the Taylor household is known as issue #154. Below that are abstracts and direct links for each of the papers. I plan to blog more specifically about some of the papers in the few weeks, as well.

_______________

Symposium: Government Debt

“Japan’s Debt Puzzle: Sovereign Wealth Fund from Borrowed Money,” by Yili Chien, Wenxin Du, and Hanno Lustig

    We analyze the risks associated with Japan’s prolonged low-interest rate policies amid a global environment of rising rates. To finance its persistent deficits, the Japanese public sector depends on inexpensive domestic funding to invest in risky assets both domestically and internationally, effectively creating a sovereign wealth fund fueled by borrowed money. Ultimately, these risks fall on Japanese bondholders, depositors, and taxpayers. While the United States faces similar fiscal pressures, it is unlikely to adopt Japan’s approach.

“Putting US Fiscal Policy on a Sustainable Path,” by Karen Dynan and Douglas Elmendorf

    Even allowing for uncertainty about the future economy, current US fiscal policies are almost certainly unsustainable. Therefore, policymakers must decide when and in what ways to raise taxes and reduce spending to put debt on a lower trajectory. Acting sooner rather than later would increase national savings, broaden the policy options, reduce the chance of a fiscal crisis, and provide fiscal space for responding to adverse developments. The probability of a near-term fiscal crisis is difficult to assess: Yields on Treasury debt are within their ranges of the past few decades, which suggests that investors are not that worried about the budget outlook—but debt and deficits are at exceptionally high levels, and experience shows that investors’ confidence in a government’s fiscal management can deteriorate quickly.

“Sovereign Debt and Fiscal Integration in the European Union,” by Zsolt Darvas, Lennard Welslau, and Jeromin Zettelmeyer

    This paper examines sovereign debt risks in the European Union, which has centralized monetary policy within the euro area, while fiscal policies remain national. Institutional reforms, including common banking supervision, the European Stability Mechanism, the European Central Bank’s market-stabilisation instruments, and a new set of fiscal rules, have mitigated vulnerabilities arising from the interdependence between banks and sovereigns. Stochastic debt sustainability analysis suggests that debt remains sustainable in most EU countries, although substantial fiscal adjustments will be required in some cases. Fiscal reaction function estimates, however, reveal a weakening policy response to rising debt, signalling increased medium-term risks. The paper argues that further adaptation of fiscal rules is needed to encourage investment and provide greater flexibility for low-risk countries. Expanding the pool of common EU safe assets could also help break the bank-sovereign doom-loop, attract foreign investors, and strengthen fiscal sustainability.

“China’s Lending to Developing Countries: From Boom to Bust,” by Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch

    This paper provides a comprehensive overview of China’s lending to developing countries—a central feature of today’s international financial system. Building on our previous research and the work of others, we document the scale, destination, and terms of China’s overseas lending boom, as well as the lending bust and defaults that have followed. We compare China’s lending boom to past boom-bust cycles and discuss the implications of China’s rise as an international creditor on recipient countries and sovereign debt markets. The evidence indicates that Chinese state banks are assertive and commercially sophisticated lenders. For recipient countries, however, the jury is still out: it remains to be seen whether the gains from China’s lending—through growth and improved infrastructure—will outweigh the more immediate burdens of debt service or the multifaceted costs of default.

Symposium: The East Asian Tigers

“Industrial Policy, Asian Miracle Style,” by Reda Cherif and Fuad Hasanov

    We decipher the riddle of the meteoric rise of the Asian Miracles—Korea, Taiwan, Singapore and Hong Kong, and Japan before them—in the second half of the twentieth century. We argue that the secret of their success lies in the specific type of industrial policy focused on technology and innovation. This overarching policy focused on exports of sophisticated products by domestic firms while fostering fierce domestic competition and accountability for the support received. The successful implementation of this policy depended on a particular type of institutions—a leading agency with a distinct institutional design and a mandate to develop sophisticated industries. The experience of the Asian miracles provides a blueprint for developing economies to achieve rapid convergence with advanced economies. It also suggests a reassessment of the roles of the state and the market, the appropriate tools of industrial policy, and the meaning of “good” institutions.

“The World Bank’s East Asian Miracle: Too Much a Product of Its Time?” by Nancy Birdsall

    The 1993 publication of a World Bank book on the East Asian Miracle explained the extraordinarily rapid growth of Japan and seven other economies of East Asia (at 5 percent a year) between 1965 and 1990 as grounded in those economies’ adherence to market “fundamentals”—sound macro management, “shared” growth policies, investment in human capital—combined with an “export push” which fostered the technological learning that drove those countries’ high total factor productivity growth. The Bank authors dismissed “industrial policy” as central to their growth and cautioned against other developing countries adopting industrial policy in the absence of strong government institutions. Was the book too much a product of its post-Soviet, neoliberal era? Considering what we know now about the state of governance in developing countries, might industrial policy help boost growth in at least some developing countries?

Articles

“Credit, Debt-Deflation, and the Great Depression Revisited,” by Ben S. Bernanke

    This article revisits the thesis of Bernanke (1983) that the disruption of private credit markets induced by deflation and falling nominal incomes helps to explain the depth and persistence of the Great Depression. This new look is motivated by economists’ increased attention to the role of financial frictions in economic fluctuations as well as recent empirical research on the Depression and other episodes of disrupted credit. Overall, considerable evidence now exists that the financial distress of both borrowers (farmers, households, and businesses) and lenders (nonbanks as well as banks) significantly depressed credit flows, spending, and economic activity in the 1930s. Indeed, judging by their policy choices and the accompanying rationales, political leaders of the period evidently viewed the normalization of credit flows as a top priority in their fight against the Depression.

“Comparing Experimental and Nonexperimental Methods: What Lessons Have We Learned Four Decades after LaLonde (1986)?” by Guido W. Imbens and Yiqing Xu

    In 1986, Robert LaLonde published an article comparing nonexperimental estimates to experimental benchmarks (LaLonde 1986). He concluded that the nonexperimental methods at the time could not systematically replicate experimental benchmarks, casting doubt on their credibility. Following LaLonde’s critical assessment, there have been significant methodological advances and practical changes, including (1) an emphasis on the unconfoundedness assumption separated from functional form considerations, (2) a focus on the importance of overlap in covariate distributions, (3) the introduction of propensity score-based methods leading to doubly robust estimators, (4) methods for estimating and exploiting treatment effect heterogeneity, and (5) a greater emphasis on validation exercises to bolster research credibility. To demonstrate the practical lessons from these advances, we reexamine the LaLonde data. We show that modern methods, when applied in contexts with sufficient covariate overlap, yield robust estimates for the adjusted differences between the treatment and control groups. However, this does not imply that these estimates are causally interpretable. To assess their credibility, validation exercises (such as placebo tests) are essential, whereas goodness-of-fit tests alone are inadequate. Our findings highlight the importance of closely examining the assignment process, carefully inspecting overlap, and conducting validation exercises when analyzing causal effects with nonexperimental data.

“Why Regulate Junk Fees?” by Neale Mahoney

    This essay examines the growing prevalence of junk fees, including mandatory back-end fees and hidden add-on charges, which obscure the true cost of goods and services. Drawing on examples from event tickets, hotels, cable bills, restaurants, and financial services, I show how these pricing practices increase search costs and equilibrium prices, distort consumer choices, and divert innovation toward exploitative rather than value-enhancing strategies. Economic theory and evidence suggest that competition and disclosure alone are often insufficient to discipline junk fees. I review recent regulatory responses, including federal and state rules that require all-in-one upfront pricing, and discuss their implications for consumer welfare and market efficiency. The rapid evolution of junk fee policies provides economists with rich opportunities to study their intended and unintended consequences. At its core, the case for regulating junk fees rests not on paternalism but on enhancing market functioning.

“Retrospectives: W. E. B. Du Bois, Harvard Economics, and Marginalist Wage Theory,” by Daniel Kuehn

      W. E. B. Du Bois (1868–1963) is best known as a sociologist, historian, and civil rights leader, but he is also increasingly appreciated as an economist. Du Bois’s work in economics was primarily empirical, drawing heavily on the German Historical School of Economics and later on Karl Marx. However, during his early economic studies at Harvard University, Du Bois was interested in marginalism as a theoretical solution to the problem of wage determination. In this paper, I explore the marginalist wage theory developed by Du Bois in his unpublished 158-page 1891 manuscript, A Constructive Critique of Wage Theory. I show that Du Bois developed a wage theory that was at the frontier of marginalist analysis in 1891 and that anticipated important developments in marginal productivity theory and the theory of labor supply. While he did not reengage marginalism after his time in Berlin, Du Bois’s work on wage theory reinforces recent recognition of his contributions to economics.

“Recommendations for Further Reading,” by Timothy Taylor

The post Fall 2025 Journal of Economic Perspectives Freely Available Online first appeared on Conversable Economist.