This paper considers the impact of leisure preference and leisure externalities on growth and labor supply in a Lucas  type model, as in Gómez , with a separable non‐homothetic utility and the assumption that physical and human capital are both necessary inputs in both the goods and the education sectors.
We formulate the central bank’s problem of selecting an optimal long-run inflation
rate as the choice of a distorting tax by a planner who wishes to maximize discounted
stationary utility for a heterogeneous population of infinitely-lived households in an
economy with constant aggregate income and public information.
The two channels of default on unsecured consumer debt are (i) bankruptcy, which
legally grants partial or complete removal of unsecured debt under certain circumstances,
and (ii) delinquency, which is informal default via nonpayment.
China’s over 25% aggregate household saving rate is one of the highest in the world. One popular view attributes the high saving rate to fast-rising housing prices in China. However, cross-sectional data do not show a significant relationship between housing prices and household saving rates.
This paper develops an analytically tractable Bewley model of money featuring capital and
financial intermediation. It is shown that when money is a vital form of liquidity to meet
uncertain consumption needs, the welfare costs of inflation can be extremely large.
In February 2005 Federal Reserve Chairman Alan Greenspan noticed that the 10-year Treasury yields failed to increase despite a 150-basis-point increase in the federal funds rate as a “conundrum.” This paper shows that the connection between the 10-year yield and the federal funds rate was severed in the late 1980s, well in advance of Greenspan’s observation.
The literature on the evolution of impatience, focusing on one-person decision problems,
finds that evolutionary forces favor the more patient individuals. This paper shows that in
the context of a game, this is not necessarily the case.
The Malthusian theory of evolution disregards a pervasive fact about human
societies: they expand through conflict. When this is taken account of the long-run
favors not a large population at the level of subsistence, nor yet institutions that
maximize welfare or per capita output, but rather institutions that maximize free
We examine self-referential games in which there is a chance of understanding
an opponent’s intentions. Our main focus is on the interaction of two sources of
information about opponents’ play: direct observation of the opponent’s code-of-conduct,
and indirect observation of the opponent’s play in a repeated setting.
We study the impact of loan regulation in rural India on child labor with
an overlapping-generations model of formal and informal lending, human
capital accumulation, adverse selection, and differentiated risk types.
This article uses a DSGE framework to evaluate the role of monetary policy
in determining the likelihood of encountering the zero lower bound. We find
that the probability of experiencing episodes of being at zero lower bound
depends almost exclusively on the monetary policy rule.
In the aftermath of the global financial crisis, a new policy paradigm has emerged
in which old-fashioned policies such as capital controls and other government distor-
tions have become part of the standard policy toolkit (the so-called macro-prudential
After the collapse of housing markets during the Great Depression, the U.S.
government played a large role in shaping the future of housing finance and policy.
Soon thereafter, housing markets witnessed the largest boom in recent history.
We use a dynamic stochastic general equilibrium model to address two questions about
U.S. monetary policy: 1) Can monetary policy elevate output when it is below potential? and 2) Is
the zero lower bound a trap?
Through a purely positive lens, we study and document the growing trend of mortgagors who skip mortgage payments as an extra source of "informal" unemployment insurance during the 2007 recession and the subsequent recovery.