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Working Paper
Numerical simulation of nonoptimal dynamic equilibrium models
In this paper we present a recursive method for the computation of dynamic competitive equilibria in models with heterogeneous agents and market frictions. This method is based on a convergent operator over an expanded set of state variables. The fixed point of this operator defines the set of all Markovian equilibria. We study approximation properties of the operator as well as the convergence of the moments of simulated sample paths. We apply our numerical algorithm to two growth models, an overlapping generations economy with money, and an asset pricing model with financial frictions.
Journal Article
The effects of wealth bubbles on consumption
Changes in wealth, according to our simple calculations, can account for almost all of the observed consumption fluctuations of the past two decades.
Journal Article
\\"Frictions in financial and labor markets\\": a summary of the 35th Annual Economic Policy Conference
This article contains synopses of the papers presented at the 35th Annual Economic Policy Conference of the Federal Reserve Bank of St. Louis held October 21-22, 2010. The conference theme was ?Frictions in Financial and Labor Markets.? Leading participants in this field presented their research and commentary.
Journal Article
Can trade links transmit a European crisis?
A GIIPS crisis wouldn't have too strong an effect on the U.S. economy, but an EU-wide crisis may be a serious concern.
Journal Article
New technology may cause stock volatility
Journal Article
Households during the Great Recession: the financial accelerator in action?
Households are the sector that the financial accelerator appears to have hit hardest, according to the data.
Journal Article
The U.S. financial sector's value added: trends now and then
The U.S. financial growth between 1995 and 2006 certainly translated into record-high shareholder returns. Labor compensation returns were also dramatically high at the onset of the current crisis.
Working Paper
The effects of female labor force participation on obesity
This paper assesses whether a causal relationship exists between recent increases in female labor force participation and the increased prevalence of obesity amongst women. The expansions of the Earned Income Tax Credit (EITC) in the 1980s and 1990s have been established by prior literature as having generated variation in female labor supply, particularly amongst single mothers. Here, we use this plausibly exogenous variation in female labor supply to identify the effect of labor force participation on obesity status. We use data from the National Health Interview Survey (NHIS) and replicate ...
Journal Article
Reconstructing the Great Recession
This article uses dynamic equilibrium input-output models to evaluate the contribution of the construction sector to the Great Recession and the expansion preceeding it. Through production interlinkages and demand complementarities, shifts in housing demand can propagate to other economic sectors and generate a large and sustained aggregate cycle.
Working Paper
Quantifying the shadow economy: measurement with theory
We construct a dynamic, general equilibrium model of tax evasion where agents choose to report some of their income. Unreported income requires using a payment method that avoids recordkeeping ? cash. Trade using cash to avoid taxes is the theoretical measure of the shadow economy from our model. We then calibrate our model using money, interest rate and GDP data to back out the size of the shadow economy for a sample of 30 countries and compare our estimates to traditional ad hoc estimates. Our results generate reasonably larger estimates for the size of the shadow economy than exist in ...