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Working Paper
The European unemployment dilemma
Working Paper
Volunteer labor sorting across industries
Working Paper
North-South financial integration and business cycles
This paper examines the business cycle implications of increased North-South trade in financial assets. We build a quantitative general equilibrium model of North-South trade and compare the model's predictions under two asset market assumptions: a restricted setting in which asset trade is limited to a non-contingent one-period bond market; and a highly integrated setting in which agents have access to a complete contingent-claims market. Simulations of the North-South model suggest that increased North-South trade in asset markets (a) lowers Southern consumption and output volatility, and ...
Working Paper
Credit market imperfections and the heterogeneous response of firms to monetary shocks
This paper assesses the bank-lending channel interpretation of evidence on the heterogeneous response of firms to monetary shocks. To do so I develop a quantitative general equilibrium model of the bank-lending channel with imperfect credit markets. The calibrated model's steady state supports a common identification strategy adopted in the literature: small firms are credit constrained and large firms are not. For some parameter values the model reproduces the cyclical observations viewed as supporting the lending view of the monetary transmission mechanism and for others it does not. The ...
Working Paper
Investment cyclicality in manufacturing industries
Working Paper
North-South terms of trade: an empirical investigation
My empirical analysis a reveals a strong link between the terms of trade of industrial and developing countries. I show that the terms of trade developing countries are essentially the relative prices of commodity exports and manufactured imports. Similarly, I find that terms of trade fluctuations of industrial countries are heavily influenced by movements in the relative price of manufactured exports and commodity imports. This means that improvements in the terms of trade of developing countries imply a worsening in the terms of trade of developing industrial countries, and vice versa. One ...
Working Paper
The evolution of small change
Western Europe was plagued with currency shortages from the 14th to the 19th century, at which time a `standard formula' had been devised to cure the problem. We document the evolution of mon- etary theory, policy experiments and minting tech- nology over the course of six hundred years. In a companion paper, we use a cash-in-advance model of commodity money to provide an analytical frame- work for the problem of small change.
Working Paper
The effect of state fiscal reform on population heterogeneity
This paper tests whether state fiscal policy alters neighborhood income homogeneity. One implication of the Tiebout model is that within-community homogeneity declines as a result of an exogenous decrease in the ability of jurisdictions to set local tax and expenditure levels. The Property tax revolt and the school finance equalization reform of the 1970s and 1980s offer a test of the role of state fiscal reform on aggregate population sorting behavior. The results show that fiscal reform, especially tax and expenditure limitation laws and property tax reform, results in a small but ...
Working Paper
Unit roots in real GNP: do we know, and do we care?