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Conference Paper
Optimal fiscal policy in a monetary union - comments
Journal Article
Postwar stability: fact or fiction:
Working Paper
Testing intertemporal budget constraints: theory and applications to U. S. federal budget and current account deficits
Previous tests of intertemporal budget balance and present value relationships have generally assumed either a constant discount rate or a constant expected discount rate. Empirical applications of these tests to the study of U.S. government deficits have produced conflicting results. This paper extends this recent work by deriving a testable condition that is sufficient to ensure intertemporal budget balance as long as the expected discount rate is strictly positive. ; We use our test to ask whether the U.S. budget and current account deficits are sustainable. Using postwar annual data, we ...
Working Paper
Borrowing restrictions and wealth constraints: implications for aggregate consumption
Recent empirical studies have found that consumption is more sensitive to current income than simple versions of the life-cycle, permanent income hypothesis would predict. The present paper studies a model in which the fraction of consumers exhibiting excess sensitivity is endogenously determined. The presence of income uncertainty and restrictions on borrowing are shown to generate a distribution of consumption across individuals which is consistent with the recent empirical evidence. The aggregate fraction of consumers facing a binding borrowing constraint is shown to exhibit positive ...
Journal Article
Minding the speed limit
Journal Article
Examining the recent surge in M1
Journal Article
Do deficits matter?