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Fourth Quarter 2017

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Posted 2017-10-04

Industrial and Occupational Employment Changes During the Great Recession

by Sangmin Aum, Sang Yoon Lee, and Yongseok Shin

The U.S. labor market contracted sharply during the Great Recession. The ensuing recovery has been sluggish and by some measures still incomplete.

Posted 2017-10-04

Fiscal Federalism and Optimal Income Taxes

by Maximiliano A. Dvorkin

This paper studies how local policies—specifically, taxes on income with redistributive goals—affect the migration decisions of individuals and, in turn, how these migration decisions affect local and economy-wide tax and redistribution policies. The author develops a model of optimal taxation for a federal system of governments in the tradition of Mirrlees (1971), where taxes can be fully nonlinear but informational asymmetries prevent the equalization of well being across workers due to informational rents. 

Posted 2017-10-04

Return to Capital in a Real Business Cycle Model

by Paul Gomme, B. Ravikumar, and Peter Rupert

Can the neoclassical growth model generate fluctuations in the return to capital similar to those observed in the United States? Equating stock market returns with the return to capital, the bulk of the literature concludes that it cannot. 

Posted 2017-10-04

Monetary Policy with Declining Deficits: Theory and an Application to Recent Argentine Monetary Policy

by Rodolfo E. Manuelli and Juan I. Vizcaino

The authors study the nature of the optimal monetary policy in a regime of fiscal dominance when the monetary authority—which can print money or issue interest-earning debt—is required to finance an exogenous sequence of transfers to the Treasury. They show that the degree of commitment on the part of the monetary authority has a significant impact on the details of the optimal policy.

Posted 2017-10-04

Living Standards in St. Louis and the Eighth Federal Reserve District: Let’s Get Real

by Cletus C. Coughlin, Charles S. Gascon, and Kevin L. Kliesen

Recently, the Bureau of Economic Analysis (BEA) has developed the Regional Price Parities (RPPs), spatial price indexes that allow for comparison of cost of living differences across various geographic areas. By construction, RPPs compare the average price level for a region with the national average. 

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