The Journal of The Journal of Economic Perspectives Economic Perspectives The Journal of Summer 2018, Volume 32, Number 3 Economic Perspectives Symposia Macroeconomics a Decade after the Great Recession Mark Gertler and Simon Gilchrist, “What Happened: Financial Factors in the Great Recession” Atif Mian and Amir Su, “Finance and Business Cycles: The Credit-Driven Household Demand Channel” Emi Nakamura and Jón Steinsson, “Identication in Macroeconomics” Jordi Galí “The State of New Keynesian Economics: A Partial Assessment” Lawrence J. Christiano, Martin S. Eichenbaum, and Mathias Trabandt, “On DSGE Models” A journal of the Patrick J. Kehoe, Virgiliu Midrigan, and Elena Pastorino, “Evolution of Modern American Economic Association Business Cycle Models: Accounting for the Great Recession” Greg Kaplan and Giovanni L. Violante, “Microeconomic Heterogeneity and Macroeconomic Shocks” 32, Number 3 Summer 2018 Volume Incentives in the Workplace Edward P. Lazear, “Compensation and Incentives in the Workplace” Lea Cassar and Stephan Meier, “Nonmonetary Incentives and the Implications of Work as a Source of Meaning” Greg Kaplan and Sam Schulhofer-Wohl, “The Changing (Dis-)Utility of Work” Articles Michael Bailey, Rachel Cao, Theresa Kuchler, Johannes Stroebel, and Arlene Wong, “Social Connectedness: Measurement, Determinants, and Effects” Features Recommendations for Further Reading Summer 2018 The American Economic Association The Journal of Correspondence relating to advertising, busi- Founded in 1885 ness matters, permission to quote, or change Economic Perspectives of address should be sent to the AEA business EXECUTIVE COMMITTEE office: [email protected]. Street ad- Elected Officers and Members dress: American Economic Association, 2014 A journal of the American Economic Association President Broadway, Suite 305, Nashville, TN 37203. 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GWYN LOFTIS The Journal of Economic Perspectives Contents Volume 32 • Number 3 • Summer 2018 Symposia Macroeconomics a Decade after the Great Recession Mark Gertler and Simon Gilchrist, “What Happened: Financial Factors in the Great Recession” � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 3 Atif Mian and Amir Sufi, “Finance and Business Cycles: The Credit-Driven Household Demand Channel” � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 31 Emi Nakamura and Jón Steinsson, “Identification in Macroeconomics” � � � � � � � 59 Jordi Galí, “The State of New Keynesian Economics: A Partial Assessment” � � � � 87 Lawrence J� Christiano, Martin S� Eichenbaum, and Mathias Trabandt, “On DSGE Models” � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 113 Patrick J� Kehoe, Virgiliu Midrigan, and Elena Pastorino, “Evolution of Modern Business Cycle Models: Accounting for the Great Recession” � � � � � � � � � � 141 Greg Kaplan and Giovanni L� Violante, “Microeconomic Heterogeneity and Macroeconomic Shocks” � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 167 Incentives in the Workplace Edward P� Lazear, “Compensation and Incentives in the Workplace” � � � � � � � � 195 Lea Cassar and Stephan Meier, “Nonmonetary Incentives and the Implications of Work as a Source of Meaning” � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 215 Greg Kaplan and Sam Schulhofer-Wohl, “The Changing (Dis-)Utility of Work” � 239 Articles Michael Bailey, Rachel Cao, Theresa Kuchler, Johannes Stroebel, and Arlene Wong, “Social Connectedness: Measurement, Determinants, and Effects” � � 259 Feature Timothy Taylor, “Recommendations for Further Reading” ����������������� 281 Statement of Purpose The Journal of Economic Perspectives attempts to fill a gap between the general interest press and most other academic economics journals� The journal aims to publish articles that will serve several goals: to synthesize and integrate lessons learned from active lines of economic research; to provide economic analysis of public policy issues; to encourage cross-fertilization of ideas among the fields of economics; to offer readers an accessible source for state-of-the-art economic thinking; to suggest directions for future research; to provide insights and read- ings for classroom use; and to address issues relating to the economics profession� Articles appearing in