Rehypothecation refers to the practice of re-using (selling or pledging
as collateral) an asset that has already been pledged as collateral for a
loan. We develop a dynamic general equilibrium monetary model
where an “asset shortage” motivates the rehypothecation of assets.
We use cross-country data and instrumental variables widely used in the
literature to show that (i) institutions (such as property rights and the rule of law) do
not explain industrialization and (ii) agrarian countries and industrial countries have
entirely different determinants for income levels.
This study proposes and quantitatively assesses a terms-of-trade penalty for defaulting: defaulters must exchange more of their own goods for imports, which causes an adjustment to the equilibrium exchange rate.
Consider the following facts. In 1950, the richest countries attained an average of 8 years
of schooling whereas the poorest countries 1.3 years, a large 6-fold difference. By 2005, the
difference in schooling declined to 2-fold because schooling increased faster in poor than in
In this paper we compare the welfare effects of unemployment insurance (UI) with an universal
basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies
provide a safety net in the face of idiosyncratic shocks.
This paper explores the role played by structural transformation and the resulting relocation of workers from rural to urban areas in the recent housing boom in China. This development process has fostered an ongoing increase in urban housing demand, which, combined with a relatively inelastic supply due to land and entry restrictions, has raised housing and land prices.
This article develops time-series models to represent three alternative, potential monetary policy regimes as monetary policy returns to normal. The first regime is a return to the high and volatile inflation rate of the 1970s.
A model is constructed in which consumers and banks have incentives to fake the quality of collateral. Conventional monetary easing can exacerbate these problems, in that the mispresentation of collateral becomes
more profitable, thus increasing haircuts and interest rate differentials.
This paper (i) estimates the local effects of government stimulus spending on labor market
outcomes and (ii) shows how these effects can be obtained from a firm's optimal policy in the
presence of costs to hiring workers.
This paper provides a theory to explain the paradoxical features of the great housing
boom in China —the persistently faster-than-GDP housing price growth, exceptionally
high capital returns, and excessive vacancy rates.
The 1950s are often pointed to as a decade in which the Federal Reserve operated a particularly successful monetary policy. The present paper examines the evolution of Federal Reserve monetary policy from the mid-1930s through the 1950s in an effort to understand better the apparent success of policy in the 1950s.
A model of money, credit, and banking is constructed in which the differential pledgeability of collateral and the scarcity of collateralizable wealth lead to a term premium — an upward-sloping nominal yield curve.