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Third Quarter 2020

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Posted 2020-07-31

A Short Tour of Global Risks

by Carmen M. Reinhart

This article is based on the author’s Homer Jones Memorial Lecture delivered at the Federal Reserve Bank of St. Louis, Wednesday, June 25, 2019.

Posted 2020-07-31

Offshoring to a Developing Nation with a Dual Labor Market

by Subhayu Bandyopadhyay, Arnab Basu, Nancy Chau, and Devashish Mitra

We present a model of offshoring of tasks to a developing nation characterized by a minimum-wage formal sector and a flexible-wage informal sector. Some offshored tasks are outsourced by the formal sector to the lower-wage informal sector.

Posted 2020-07-31

Asset Pricing Through the Lens of the Hansen-Jagannathan Bound

by Christopher Otrok and B. Ravikumar

Stochastic discount factor (SDF) models are the dominant framework for modern asset pricing. The Hansen-Jagannathan bound is a characterization of the admissible set of SDFs, given a vector of asset returns.

Posted 2020-07-31

Reconstructing the Great Recession

by Michele Boldrin, Carlos Garriga, Adrian Peralta-Alva, and Juan M. Sánchez

This article uses dynamic equilibrium input-output models to evaluate the contribution of the construction sector to the Great Recession and the expansion preceeding it. Through production interlinkages and demand complementarities, shifts in housing demand can propagate to other economic sectors and generate a large and sustained aggregate cycle.

Posted 2020-07-31

The Case of the Reappearing Phillips Curve: A Discussion of Recent Findings

by Asha Bharadwaj and Maximiliano A. Dvorkin

The Phillips curve seems to have flattened over time. In this article, we use a simple New Keynesian model to analyze potential pitfalls in the estimation of the slope of the structural Phillips curve.