Search Results
Journal Article
Is noninflationary growth an oxymoron?
A review of the theoretical and empirical case for disinflationary economic growth, showing that, contrary to popular wisdom, it is quite possible to have a booming economy without an acceleration in the price level.
Working Paper
Home production meets time-to-build
An innovation in this paper is to introduce a time-to-build technology for the production of market capital into a model with home production. The paper?s main finding is that the two anomalies that have plagued all household production models?the positive correlation between business and household investment, and household investment leading business investment over the business cycle?are resolved when time-to-build is added.
Working Paper
General equilibrium with nonconvexities, sunspots, and money
We study general equilibrium with nonconvexities. In these economies there exist sunspot equilibria without the usual assumptions needed in convex economies, and they have good welfare properties. Moreover, in these equilibria, agents act as if they have quasi-linear utility. Hence wealth effects vanish. We use this to construct a new model of monetary exchange. As in Lagos-Wright, trade occurs in both centralized and decentralized markets, but while that model requires quasilinearity, we have general preferences. Given our specification looks much like the textbook Arrow-Debreu model, we ...
Journal Article
Okun's law revisited: should we worry about low unemployment?
A review of the connection between labor resource utilization and the growth/unemployment correlation summarized by Okun's law, showing that the instability of that relationship, particularly over short time horizons, has important implications for monetary policy.
Working Paper
What accounts for the decline in crime?
The authors? dynamic equilibrium model guides their quantitative investigation of the major determinants of property-crime patterns in the U.S. The model is capable of reproducing the drop in property crime that occurred between 1980 and 1996. The most important influences on the decline are a higher probability of apprehension, a stronger economy, and the aging of the population. The effect of unemployment on crime is negligible. Increased inequality in earnings prevented an even larger decline in crime. The authors? analysis can account for the behavior of the time series of property crime ...
Working Paper
The business cycle and the life cycle
The paper documents how cyclical fluctuations in market work vary over the life cycle and then assesses the predictions of a life-cycle version of the growth model for those observations. The analysis yields a simple but striking finding. The main discrepancy between the model and that data lies in the inability of the model to account for fluctuations in hours for individuals in the first half of their life cycle. The predictions for those in the latter half of the life cycle are quite close to the data.
Working Paper
Understanding the determinants of crime
In this paper, we use an overlapping generations model where individuals are allowed to engage in both legitimate market activities and criminal behavior in order to assess the role of certain factors on the property crime rate. In particular, we investigate if any of the following could be capable of generating the large differences in crime rates that are observed across countries: differences in the unemployment rate, the fraction of low-human-capital individuals in an economy, the probability of apprehension, the duration of jail sentences, and income inequality. We find that small ...
Journal Article
Return to Capital in a Real Business Cycle Model
Can the neoclassical growth model generate fluctuations in the return to capital similar to those observed in the United States? Equating stock market returns with the return to capital, the bulk of the literature concludes that it cannot. This article makes two contributions. First is an equivalence for the neoclassical growth model between a stock market return and a return based on income and capital stock data. While the stock market return is extremely volatile, the income-based return is not. Second is the finding that the neoclassical growth model with shocks to labor productivity ...
Journal Article
The myth of the overworked American
A challenge to the popular presumption that U.S. workers are experiencing declining levels of leisure time, finding that the total hours of work have not changed much over the past decade, but that the composition of labor has shifted from home work to market work, mostly as a result of changes in the total hours worked by women.
Journal Article
Infrastructure and the wealth of nations
Economies can?t grow without a sufficiently developed infrastructure, but how deep does the infrastructure have to be to make a difference? The authors take a look at some research from the Fraser Institute that examines the relationship between economic growth and economic infrastructure across 123 countries. They find that infrastructure is a bit of an all-or-nothing proposition.