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.
This paper proposes a theoretical and quantitative analysis of the reallocation of labor across firms in response to idiosyncratic shocks of different persistence. Creating and destroying jobs is costly and workers are paid a share of the value of the marginal worker.
As a result of legal restrictions on branch banking, an extensive interbank system developed in the United States during the 19th century to facilitate interregional payments and flows of liquidity and credit. Vast sums moved through the interbank system to meet seasonal and other demands, but the system also transmitted shocks during banking panics.
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.
Trade data are typically reported at the level of regions or countries and are therefore
aggregates across space. In this paper, we investigate the sensitivity of standard
gravity estimation to spatial aggregation.
Gertler and Gilchrist (1994) provide seminal evidence for the prevailing view that adverse shocks are propagated via credit constraints: small firms are affected more during tight credit periods than large firms.
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.
We provide new empirical evidence of a relationship between asset prices and trade-
Induced international R&D spillovers; in particular, we find that pairs of countries
that share more research and development exhibit more highly correlated stock market
returns and less volatile exchange rates.
This paper asked the question of whether the behavior and compensation of interlocked executives
and non-independent board of directors are consistent with the hypothesis of governance
problem or whether this problem is mitigated by implicit and market incentives.
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.
College-educated workers entering the labor market in 1940 experienced a 4-fold increase in
their labor earnings between the ages of 25 and 55; in contrast, the increase was 2.6-fold for
those entering the market in 1980. For workers without a college education these figures are
3.6-fold and 1.5-fold, respectively.
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 compare methods to measure comovement in business cycle data using multi-level dynamic
factor models. To do so, we employ a Monte Carlo procedure to evaluate model performance
for different specifications of factor models across three different estimation procedures.