A young person asked me today for a few papers that would be great to read early on in one’s career. Here is a list I came up with (I posted a shorter list earlier in reply to a comment). There are many other great papers (and I apologize if I didn’t include yours), but my goal was to focus on papers that a 21-year-old undergrad would enjoy a lot. A paper on the asymptotic properties of the bootstrap or on some subtle point about New Keynesian models, as important as it might be, is not what I am looking for. Also, of course, the list reflects my deeply biased taste. So, feel free to add in the comment section other papers you love! Philippe Aghion and Peter Howitt (1992), “A Model of Growth Through Creative Destruction,” Econometrica. George A. Akerlof (1970), “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics. Armen A. Alchian (1950), “Uncertainty, Evolution, and Economic Theory,” Journal of Political Economy. William J. Baumol (1967), “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis,” American Economic Review. Gary S. Becker (1973), “A Theory of Marriage: Part I,” Journal of Political Economy. Douglas W. Diamond and Philip H. Dybvig (1983), “Bank Runs, Deposit Insurance, and Liquidity,” Journal of Political Economy. Xavier Gabaix (1999), “Zipf’s Law for Cities: An Explanation,” Quarterly Journal of Economics. Xavier Gabaix and Augustin Landier (2008), “Why Has CEO Pay Increased So Much?,” Quarterly Journal of Economics. Luis Garicano (2000), “Hierarchies and the Organization of Knowledge in Production,” Journal of Political Economy. Edward L. Glaeser, Bruce Sacerdote and José A. Scheinkman (1996), “Crime and Social Interactions,” Quarterly Journal of Economics. Sanford J. Grossman and Joseph E. Stiglitz (1980), “On the Impossibility of Informationally Efficient Markets,” American Economic Review. Oliver Hart and John Moore (1990), “Property Rights and the Nature of the Firm,” Journal of Political Economy. Friedrich A. Hayek (1945), “The Use of Knowledge in Society, American Economic Review. Bengt Holmström (1979), “Moral Hazard and Observability,” Bell Journal of Economics. Charles I. Jones (1995), “R&D-Based Models of Economic Growth,” Journal of Political Economy. Charles I. Jones (2005), “The Shape of Production Functions and the Direction of Technical Change,” Quarterly Journal of Economics. Michael Kremer (1993), “Population Growth and Technological Change: One Million B.C. to 1990,” Quarterly Journal of Economics. Michael Kremer (1993), “The O-Ring Theory of Economic Development,” Quarterly Journal of Economics. Paul Krugman (1991), “Increasing Returns and Economic Geography,” Journal of Political Economy. Robert E. Lucas, Jr. (1978), “On the Size Distribution of Business Firms,” Bell Journal of Economics. Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny (1989), “Industrialization and the Big Push,” Journal of Political Economy. Paul M. Romer (1990), “Endogenous Technological Change,” Journal of Political Economy. Sherwin Rosen (1981), “The Economics of Superstars,” American Economic Review. Alvin E. Roth (2007), “Repugnance as a Constraint on Markets,” Journal of Economic Perspectives. Thomas C. Schelling (1971), “Dynamic Models of Segregation,” Journal of Mathematical Sociology. Andrei Shleifer and Robert W. Vishny (1993), “Corruption,” Quarterly Journal of Economics. Michael Spence (1973), “Job Market Signaling,” Quarterly Journal of Economics. Robert M. Townsend (1979), “Optimal Contracts and Competitive Markets with Costly State Verification,” Journal of Economic Theory. Martin L. Weitzman (1974), “Prices vs. Quantities,” Review of Economic Studies.

I am extremely happy to circulate a new paper, “Structural Estimation with Unstructured Data,” joint with Sara Casella (@SaraCasella9), Stephen Hansen, Ryohei Oishi, and Minchul Shin: sas.upenn.edu/~jesusfv/Text_… This has been a long time in the making: I presented a first set of slides (no draft!) at the ASSA meetings in San Diego in 2020. But COVID and life in general slowed down progress. Fortunately, we finally pushed the paper across the (working paper) finish line over the last few weeks. The idea, I believe, is very cool, and I am proud of how we implemented it. Can we use unstructured data (e.g., text, images, sound, ...) to estimate dynamic equilibrium models and their structural parameters? The answer is yes. More concretely, we augment the standard state-space representation of a dynamic equilibrium model with a noncore measurement block that links structural shocks to time series derived from unstructured data, and then use standard filtering and McMc to draw from the posterior. We rely on a spike-and-slab prior to let the data select which series are informative. To illustrate how well this works, we take a medium-scale New Keynesian model for the U.S. and estimate it using conventional data (i.e., output, inflation) together with FOMC transcripts (text). We document how incorporating text improves predictive performance and materially alters structural inference: the new model estimates a lower response of the policy rate to inflation, higher price stickiness, and lower price indexation, implying a flatter and less backward-looking price Phillips curve. The intuition is simple: the FOMC transcripts tell us a great deal about the Fed’s true policy function because they reflect the expectations and preferences of policymakers, even if only in verbal terms. The likelihood function appreciates such information. The idea generalizes to all sorts of dynamic equilibrium models. For example, one could use Amazon reviews alongside standard data on prices and quantities to estimate structural models in IO. Or one could use images to expand the information set of DSGE models. The possibilities of the methodology are endless. As always, comments are much appreciated.