The interest rate at which US firms borrow funds has two features: (i) it moves in a countercyclical
fashion and (ii) it is an inverted leading indicator of real economic activity: low interest rates today forecast
future booms in GDP, consumption, investment, and employment.
This paper reviews and critically evaluates the empirical literature on the effects of U.S. unconventional monetary policy on both financial markets and the real economy. In order to understand how such policies could work, we also briefly review the literature on the theory of such policies.
Developing countries frequently offer tax incentives and even subsidize the entry and operation of foreign firms. I examine the optimality of such policies in an economy where growth is driven by entrepreneurial know-how, a skill that is continuously updated on the basis of the productive ideas implemented in the country.
Along with health, Social Security Disability Insurance (SSDI) evaluates work-limiting disability by considering vocational factors including age, education, and past work experience. As the number of SSDI applicants and awards has increased, these vocational criteria are increasingly important to acceptances and denials.
China is undergoing its long-awaited industrial revolution. There is no shortage of commentary and opinion on this dramatic period, but few have attempted to provide a coherent, in-depth, political economic framework that explains the fundamental mechanisms behind China’s rapid industrialization.
The 1960s and 1970s witnessed rapid growth in the markets for new money market instruments, such as negotiable certificates of deposit (CDs) and Eurodollar deposits, as banks and investors sought ways around various regulations affecting funding markets.
Empirical analysis of the Fed’s monetary policy behavior suggests that the Fed smooths
interest rates— that is, the Fed moves the federal funds rate target in several small steps instead
of one large step with the same magnitude.
Post-World War II witnessed the largest housing boom in recent history. This paper develops a quantitative equilibrium model of tenure choice to analyze the key
determinants in the co-movement between home-ownership and house prices over the period 1940-1960.
This paper considers a dynamic Mirrleesian economy and decomposes agents' lifetime incentive compatibility (IC) constraints into a sequence of temporal ones. We encode the
frequency and severeness of these temporal IC constraints by their associated Lagrange multipliers,showing that the accumulation of the Lagrange multipliers on the consumption part is a nonnegative martingale.
Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries.
Why has the U.S. black/white earnings gap remained around 40 percent for nearly 40 years? This paper's answer consists of a model of skill accumulation and neighborhood formation featuring a trap: Initial racial inequality and racial preferences induce racial segregation and asymmetric skill accumulation choices that perpetuate racial inequality.
Mortgages are long-term loans with nominal payments. Consequently, under incomplete
asset markets, monetary policy can affect housing investment and the economy through the
cost of new mortgage borrowing and real payments on outstanding debt.
The interest rate at which US firms borrow funds has two features: (i) it moves in a countercyclical fashion and (ii) it is an inverted leading indicator of real economic activity: low interest rates forecast booms in GDP, consumption, investment, and employment.
We study the endogenous choice to accept fiat objects as media of exchange and their implications for nominal exchange rate determination. We consider a two-country environment with two currencies which can be used to settle any transactions.
The supply and demand of credit are not always well aligned and matched, as is reflected
in the countercyclical excess reserve-to-deposit ratio and interest spread between the lending
rate and the deposit rate.
What determines the earnings of a worker relative to his peers in the same
occupation? What makes a worker fail in one occupation but succeed in another?
More broadly, what are the factors that determine the productivity of a worker-occupation
match? In this paper, we propose an empirical measure of skill mismatch
for a worker-occupation match, which sheds light on these questions.