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Bank:Federal Reserve Bank of Minneapolis  Series:Discussion Paper / Institute for Empirical Macroeconomics 

Discussion Paper
The replacement problem

We construct a vintage capital model of economic growth in which the decision to replace old technologies with new ones is modeled explicitly. Depreciation in this environment is an economic, not a physical concept. We describe the balanced growth paths and the transitional dynamics of this economy. We illustrate the importance of vintage capital by analyzing the response of the economy to fiscal policies designed to stimulate investment in new technologies.
Discussion Paper / Institute for Empirical Macroeconomics , Paper 95

Discussion Paper
The real business cycle: intermediate inputs and sectoral comovement

We describe the postwar U.S. business cycle for the durable and nondurable goods producing sector. The business cycle is characterized by positive comovement of output, employment, and investment across the two sectors. We develop a two sector growth model to explain the observed pattern of comovements, and suggest that intermediate inputs produced by the nondurable goods sector for the durable goods sector play a crucial role.
Discussion Paper / Institute for Empirical Macroeconomics , Paper 89

Discussion Paper
Endogenous expenditures on public schools and persistent growth

In this paper, we present a model where individuals accumulate human capital through the formal schooling. To take into account the large involvement of the public sector in education we introduce a government which collects taxes from households and provides inputs to the learning technology. In our model the public expenditures on schools and growth rates are determined endogenously. Under plausible restrictions on the parameters of our model, we show that the predictions of our model qualitatively match the observations on per capita income, years of schooling, public expenditures on ...
Discussion Paper / Institute for Empirical Macroeconomics , Paper 85

Discussion Paper
Unit roots in real GNP: do we know, and do we care?

Discussion Paper / Institute for Empirical Macroeconomics , Paper 18

Discussion Paper
Hours and employment variation in business cycle theory

Previous business cycle models have made the assumption that all the variation in the labor input is either due to changes in hours per worker or changes in number of workers, but not both. In this paper, both vary. We think this a better model for estimating the contribution of Solow technology shocks to aggregate fluctuations. We find that about 70 percent of U.S. postwar cyclical fluctuations are induced by variations in the Solow technology parameter.
Discussion Paper / Institute for Empirical Macroeconomics , Paper 17

Discussion Paper
Understanding unit rooters: a helicopter tour

Discussion Paper / Institute for Empirical Macroeconomics , Paper 4

Discussion Paper
A toolkit for analyzing nonlinear dynamic stochastic models easily

This paper describes and implements a procedure for estimating the timing interval in any linear econometric model. The procedure is applied to Taylors model of staggered contracts using annual averaged price and output data. The fit of the version of Taylors model with serially uncorrelated disturbances improves as the timing interval of the model is reduced.
Discussion Paper / Institute for Empirical Macroeconomics , Paper 101

Discussion Paper
Structural changes in the real GNP interdependence of the U.S., West Germany, and Japan during the period 1970-1986

The paper first locates quarters in the early 1970s at which the covariance matrices of the innovation vectors have shifted for the real GNPs of the USA, West Germany and Japan treated as univariate series. The paper then exhibits differences in the impulse response time profiles of the two models estimated from the data primarily before and after the break as a concise summary of the changes in dynamic interactions of the three real GNPs.
Discussion Paper / Institute for Empirical Macroeconomics , Paper 20

Discussion Paper
Risk-taking, global diversification, and growth

This paper develops a dynamic continuous-time model in which international risk sharing can yield substantial welfare gains through its positive effect on expected consumption growth. The mechanism linking global diversification to growth is an attendant world portfolio shift from safe, but low-yield, capital into riskier, high-yield capital. The presence of these two types of capital is meant to capture the idea that growth depends on the availability of an ever-increasing array of specialized, hence inherently risky, production inputs. A partial calibration exercise based on Penn World ...
Discussion Paper / Institute for Empirical Macroeconomics , Paper 61

Discussion Paper
Business cycles and the asset structure of foreign trade

Since the primary role of international financial linkages is to facilitate consumption smoothing in the face of country-specific shocks, the degree of international financial integration should play an important role in the international transmission of business cycles. This paper therefore studies the business cycle implications of restricting international trade in financial assets. The key restriction is that domestic residents must hold all risky claims to domestic output, trading only noncontingent bonds on the international asset markets. We find that restricting asset trade may or may ...
Discussion Paper / Institute for Empirical Macroeconomics , Paper 59




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