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Author:Wen, Yi 

Journal Article
China's Rapid Rise: From Backward Agrarian Society to Industrial Powerhouse in Just 35 Years

China?s industrial revolution over the past 35 years is probably one of the most important economic and geopolitical phenomena since the original Industrial Revolution in the 18th century. The rapid growth has puzzled many, in part because China tried and failed at this transformation before. What was the ?secret? this time?
The Regional Economist , Issue April

Working Paper
The effectiveness of monetary policy: an assessment

When monetary policies are endogenous, the conventional VAR approach for detecting the effect of monetary policies is powerless. This paper proposes to test the implication of monetary policies along a different dimension. That implication is to exploit the policy induced exogeneity of endogenous variables that are the source of monetary non-neutrality. We illustrate the idea by constructing a new Keynesian sticky wage model with capital accumulation and then testing the implications of optimal monetary policies for nominal wages under both complete and incomplete information. Econometric ...
Working Papers , Paper 2005-052

Trade and Gold Reserves after the Demise of the Classical Gold Standard

After the early 1920s, the relationship between gold reserves and trade flows was tenuous at best as the international payments system experienced heightened uncertainty and significant change.
On the Economy

Working Paper
Labor hoarding and inventories

Labor hoarding is a widely believed empirical behavior of firms and a prominent explanation for procyclical labor productivity. Conventional wisdom attributes labor hoarding to labor adjustment costs. This paper argues that the conventional wisdom is inadequate for understanding labor hoarding because it ignores the role of inventories. Since idle labor can be used to produce inventories, why do firms hoard labor when inventory is an option? Using a dynamic rational expectations model of profit-maximizing firms facing demand uncertainty, this paper studies the dynamic interactions between ...
Working Papers , Paper 2005-040

V-Shaped Recovery Eludes G-7 Countries

Economic growth should overshoot its long-run trend to make up for the downturn caused by the pandemic. So far, this hasn’t happened.
On the Economy

Working Paper
Inflation dynamics: a cross-country investigation

We document that "persistent and lagged" inflation (with respect to output) is a world-wide phenomenon in that these short-run inflation dynamics are highly synchronized across countries. In particular, the average cross-country correlation of inflation is significantly and systematically stronger than that of output, while the cross-country correlation of money growth is essentially zero. We investigate whether standard monetary models driven by monetary shocks are consistent with the empirical facts. We find that neither the new Keynesian sticky-price model nor the sticky-information model ...
Working Papers , Paper 2005-076

Working Paper
The Inverted Leading Indicator Property and Redistribution Effect of the Interest Rate

The interest rate at which US firms borrow funds has two features: (i) it moves in a countercyclical fashion and (ii) it is an inverted leading indicator of real economic activity: low interest rates today forecast future booms in GDP, consumption, investment, and employment. We show that a Kiyotaki-Moore model accounts for both properties when interest-rate movements are driven, in a significant way, by self-fulfilling shocks that redistribute income away from lenders and to borrowers during booms. The credit-based nature of such self-fulfilling equilibria is shown to be essential: the ...
Working Papers , Paper 2016-27

Working Paper
The Making of an Economic Superpower―Unlocking China’s Secret of Rapid Industrialization

The rise of China is no doubt the most important event in world economic history since the Industrial Revolution. The institutional theory of development based on a dichotomy of extractive vs. inclusive political institutions cannot explain China?s rise. This article argues that only a radical reinterpretation of the history of the Industrial Revolution and the rise of the West (as incorrectly portrayed by the institutional theory) can fully explain China?s growth miracle and why the determined rise of China is unstoppable. Conversely, China?s spectacular and rapid transformation from an ...
Working Papers , Paper 2015-6

Journal Article
Monetary policy's effects on unemployment

Permanent increases in the monetary base foreshadow eventual increases in inflation that can increase, rather than reduce, unemployment.
Economic Synopses

Working Paper
What inventories tell us about aggregate fluctuations -- a tractable approach to (S,s) policies

We estimate a DSGE model with (S,s) inventory policies. We find that (i) taking inventories into account can significantly improve the empirical fit of DSGE models in matching the standard business-cycle moments (in addition to explaining inventory fluctuations); (ii) (S,s) inventory policies can significantly amplify aggregate output fluctuations, in contrast to the findings of the recent general-equilibrium inventory literature; and (iii) aggregate demand shocks become more important than technol- ogy shocks in explaining the business cycle once inventories are incorporated into the model. ...
Working Papers , Paper 2012-059


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