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Author:Veracierto, Marcelo 

Working Paper
The role of housing in labor reallocation

This paper builds a dynamic general equilibrium model of cities and uses it to analyze the role of local housing markets and moving costs in determining the character and extent of labor reallocation in the US economy. Labor reallocation in the model is driven by idiosyncratic city-specific productivity shocks, which we measure using a dataset that we compile using more than 350 U.S. cities for the years 1984 to 2008. Based on this measurement, we find that our model is broadly consistent with the city-level evidence on net and gross population flows, employment, wages and residential ...
Working Paper Series , Paper WP-2010-18

Working Paper
Computing Equilibria of Stochastic Heterogeneous Agent Models Using Decision Rule Histories

This paper introduces a general method for computing equilibria with heterogeneous agents and aggregate shocks that is particularly suitable for economies with private information. Instead of the cross-sectional distribution of agents across individual states, the method uses as a state variable a vector of spline coefficients describing a long history of past individual decision rules. Applying the computational method to a Mirrlees RBC economy with known analytical solution recovers the solution perfectly well. This test provides considerable confidence on the accuracy of the method.
Working Paper Series , Paper WP 2020-05

Newsletter
Dollarization in Argentina

Chicago Fed Letter , Issue Jun

Working Paper
Business Cycle Fluctuations in Mirrlees Economies: The Case of i.i.d. Shocks

I consider a real business cycle model in which agents have private information about the i.i.d. realizations of their value of leisure. For the case of logarithmic preferences I provide an analytical characterization of the solution to the associated mechanism design problem. Moreover, I show a striking irrelevance result: That the stationary behavior of all aggregate variables are exactly the same in the private information economy as in the full information case. Numerical simulations indicate that the irrelevance result approximately holds for more general CRRA preferences.
Working Paper Series , Paper WP 2020-04

Journal Article
Corruption and innovation

In this article, the author illustrates how corruption can affect an industry's rate of innovation. An interesting result of analysis is that, under certain parameter ranges, small increases in the penalties to corruption or the effectiveness of detection can result in large increases in product innovation.
Economic Perspectives , Volume 32 , Issue Q I , Pages 29-39

Working Paper
Plant level irreversible investment and equilibrium business cycles

This paper evaluates the importance of microeconomic irreversibilities for aggregate dynamics using a general equilibrium approach. To this end a real business cycle model of establishment level dynamics is formulated and analyzed. Investments decisions are subject to irreversibility constraints and consequently, are of the (S,s) variety. This complicates the analysis since the state of the economy is described by an endogenous distribution of agents. The paper develops a computational strategy that makes this class of (S,s) economies fully tractable. Contrary to what the previous literature ...
Working Paper Series , Paper WP-98-1

Working Paper
What are the short-run effects of increasing labor market flexibility?

This paper evaluates the short-run effects of introducing labor market flexibility to an economy characterized by large firing taxes. Different reforms are considered: 1) eliminating all firing taxes, 2) introducing flexible new contracts while retaining the firing taxes on workers employed previous to the reform, and 3) introducing temporary contracts. The paper finds that eliminating all firing taxes increases the unemployment rate much more in the short run than in the long run, that introducing new flexible contracts has similar effects as eliminating all firing taxes, and that ...
Working Paper Series , Paper WP-00-29

Working Paper
Computing Equilibria of Stochastic Heterogeneous Agent Models Using Decision Rule Histories

This paper introduces a general method for computing equilibria with heterogeneous agents and aggregate shocks that is particularly suitable for economies with private information. Instead of the cross-sectional distribution of agents across individual states, the method uses as a state variable a vector of spline coefficients describing a long history of past individual decision rules. Applying the computational method to a Mirrlees RBC economy with known analytical solution recovers the solution perfectly well. This test provides considerable confidence on the accuracy of the method.
Working Paper Series , Paper WP-2020-05

Journal Article
A Simple Model of Gross Worker Flows across Labor Market States

The author develops a simple model of the gross flows of workers across labor market states that is based on Krusell et al. (2012). Its simplicity allows for analytical derivations that make the determination of these flows transparent. Moreover, he finds that if errors in the classification of agents? labor market states are introduced and allowed to vary over time, the model has the ability to generate business cycle dynamics similar to those observed in the U.S. data. However, its dynamics are driven essentially by exogenous factors, not endogenous ones.
Economic Perspectives , Issue Q II

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