We introduce a new theory for optimizing frictions that prevents agents from choosing the threshold where the slope (kink) or intercept (notch) of a constraint changes. By making these frictions a function of observables, we can estimate why agents do not report exactly at predicted thresholds....

We study the bunching identification strategy for an elasticity parameter that summarizes agents' response to changes in slope (kink) or intercept (notch) of a schedule of incentives. A notch identifies the elasticity but a kink does not, when the distribution of agents is fully flexible. We...

A continuous distribution of agents that face a piecewise-linear schedule of incentives results in a distribution of responses with mass points located where the slope (kink) or intercept (notch) of the schedule changes. Bunching methods use these mass points to estimate an elasticity parameter,...

We study the bunching identification strategy for an elasticity parameter thatsummarizes agents' response to changes in slope (kink) or intercept (notch) of aschedule of incentives. A notch identifies the elasticity but a kink does not, when thedistribution of agents is fully flexible. We...

We add goods-market frictions to a general equilibrium dynamic model with heterogeneous exporting producers and identical importing retailers. Our tractable framework leads to endogenously unmatched producers, which attenuate welfare responses to foreign shocks but increase the trade elasticity...