Value-Added Trade vs. Gross Trade
Measuring value-added trade provides a more accurate picture of global trade.
Unemployment insurance fraud
Concealed Earnings fraud accounts for almost two-thirds of the total overpayments due to all fraud.
Reopening the U.S.: Gauging the Trend of COVID-19 Transmissions
An analysis suggests that counties accounting for the vast bulk of U.S. GDP aren’t yet seeing a downward trajectory in COVID-19 cases, but growth rates have generally slowed.
Technology adoption, mortality and population dynamics
We develop a quantitative theory of mortality trends and population dynamics. Our theory emphasizes individual choices on costly adoption of healthy technologies and diffusion of knowledge about infections as a key channel for reducing mortality. Our theory is consistent with three observations on mortality: (i) The cross-country correlation between levels of mortality and income is negative; (ii) mortality in poor countries has converged to that of rich countries despite no convergence in income; and (iii) economic growth is not a prerequisite for mortality to decline. We calibrate our model ...
Earnings growth over a lifetime: not what it used to be
Convergence to Rational Expectations in Learning Models: A Note of Caution
This paper illustrates a challenge in analyzing the learning algorithms resulting in second-order difference equations. We show in a simple monetary model that the learning dynamics do not converge to the rational expectations monetary steady state. We then show that to guarantee convergence, the gain parameter used in the learning rule has to be restricted based on economic fundamentals in the monetary model.
Explaining Cross-Cohort Differences in Life Cycle Earnings
College-educated workers entering the labor market in 1940 experienced a 4-fold increase in their labor earnings between the ages of 25 and 55; in contrast, the increase was 2.6-fold for those entering the market in 1980. For workers without a college education these figures are 3.6-fold and 1.5-fold, respectively. Why are earnings profiles flatter for recent cohorts? We build a parsimonious model of schooling and human capital accumulation on the job and calibrate it to earnings statistics of workers from the 1940 cohort. The model accounts for 99 percent of the flattening of earnings ...
Capital Goods Trade, Relative Prices, and Economic Development
International trade in capital goods has quantitatively important effects on economic development through capital formation and TFP. Capital goods trade enables poor countries to access more efficient technologies, leading to lower relative prices of capital goods and higher capital-output ratios. Moreover, poor countries can use their comparative advantage and allocate their resources more efficiently, and increase their TFP. We quantify these channels using a multisector, multicountry, Ricardian model of trade with capital accumulation. The model matches several trade and development facts ...
The quantitative importance of openness in development
This paper deals with a classic development question: how can the process of economic development ? transition from stagnation in a traditional technology to industrialization and prosperity with a modern technology ? be accelerated? Lewis (1954) and Rostow (1956) argue that the pace of industrialization is limited by the rate of capital formation which in turn is limited by the savings rate of workers close to subsistence. We argue that access to capital goods in the world market can be quantitatively important in speeding up the transition. We develop a parsimonious open-economy model where ...
Price equalization does not imply free trade
In this paper we show that price equalization alone is not sufficient to establish that there are no barriers to international trade. There are many barrier combinations that deliver price equalization, but each combination implies a different volume of trade. Therefore, in order to make statements about trade barriers it is necessary to know the trade flows. We demonstrate this first theoretically in a simple two-country model. We then extend the result quantitatively to a multicountry model with two sectors. We show that for the case of capital goods trade, barriers have to be large in ...