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Working Paper
What we don’t know doesn’t hurt us: rational inattention and the permanent income hypothesis in general equilibrium
This paper derives the general equilibrium effects of rational inattention (or RI; Sims 2003,2010) in a model of incomplete income insurance (Huggett 1993, Wang 2003). We show that,under the assumption of CARA utility with Gaussian shocks, the permanent income hypothesis (PIH) arises in steady state equilibrium due to a balancing of precautionary savings and impatience. We then explore how RI affects the equilibrium joint dynamics of consumption, income and wealth, and find that elastic attention can make the model fit the data better. We finally show that the welfare costs of incomplete ...
Journal Article
The effect of the U.S. energy boom on the trade deficit
Craig S. Hakkio and Jun Nie predict the real energy trade deficit will decline at a much slower pace in 2015 than in the past few years.
Journal Article
What Has Driven the Recent Increase in Retirements?
During the pandemic, the share of retirees in the U.S. population rose much faster than its normal pace. Typically, an increase in this share is driven by more people transitioning from employment to retirement. However, we show that the recent increase was instead driven by fewer people transitioning from retirement back into employment, likely due to pandemic-related health risks. More retirees may rejoin the workforce as these health risks fade, but the retirement share is unlikely to return to a normal level for some time.
Journal Article
U.S.exports and foreign economic growth : which regions matter most?
U.S. export growth tends to vary with changes in different foreign regions' economic growth rates. This article estimates how much change in U.S. export growth may be associated with a rise or fall in a given region's GDP growth.
Working Paper
Model uncertainty, state uncertainty, and state-space models
This technical paper considers ways to capture uncertainty in the context of so-called "state-space" models. ; State-space models are powerful tools commonly used in macroeconomics, international economics, and finance. State-space models can generate estimates of an underlying, ultimately unobserved variable?such as the natural rate of unemployment?based on the movements of other variables that are observed and have some relationship to the unobserved variable. The paper shows how several macroeconomic models can be mapped to the state-space framework, thus helping quantify uncertainty ...
Journal Article
Gauging the Strength of Chinese GDP Growth
Jun Nie constructs an alternative measure to evaluate the strength of Chinese GDP growth and identifies potential risks to China?s growth in the near term.
Journal Article
China’s slowing housing market and GDP growth.
Working Paper
Unemployment Insurance during a Pandemic
The CARES Act implemented in response to the COVID-19 crisis dramatically increased the generosity of unemployment insurance (UI) benefits, triggering concerns about substantial effects on unemployment. This paper combines a labor market search-matching model with the SIR-type infection dynamics to study the effects of the CARES Act UI on both unemployment and infection. More generous UI policies create work disincentives and lead to higher unemployment but also reduce infection and save lives. Economic shutdown policies further amplify these effects of UI policies. Quantitatively, the CARES ...