This study proposes and quantitatively assesses a terms-of-trade penalty for defaulting: defaulters must exchange more of their own goods for imports, which causes an adjustment to the equilibrium exchange rate.
Consider the following facts. In 1950, the richest countries attained an average of 8 years
of schooling whereas the poorest countries 1.3 years, a large 6-fold difference. By 2005, the
difference in schooling declined to 2-fold because schooling increased faster in poor than in
In this paper we compare the welfare effects of unemployment insurance (UI) with an universal
basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies
provide a safety net in the face of idiosyncratic shocks.
Metro Business Cycles by Maria A. Arias, Charles S. Gascon, and David E. Rapach
Working Paper 2014-046C posted November 2014, updated May 2016
We construct monthly economic activity indices for the 50 largest U.S. metropolitan statistical areas (MSAs) beginning in 1990. Each index is derived from a dynamic factor model based on twelve underlying variables capturing various aspects of metro area economic activity.
Countries that trade more with each other tend to have more correlated business cycles. Yet,
traditional international business cycle models predict a much weaker link between trade and
business cycle comovement.
Rising costs of and returns to college have led to sizeable increases in the demand for
student loans in many countries. In the U.S., student loan default rates have also risen
for recent cohorts as labor market uncertainty and debt levels have increased.
Latin America has had striking changes in economic performance over time. Following the
recession and debt crises of the early 1980’s, consumption declined for about ten years and consumption per-capita in the year 2004 was roughly the same as it was in 1980.
This paper extends the previous literature on geographic (heat waves) and intertemporal
(meteor showers) foreign exchange volatility transmission to characterize the role of jumps and
Academic studies show that technical trading rules would have earned substantial
excess returns over long periods in foreign exchange markets. However, the approach to
risk adjustment has typically been rather cursory.
Reflecting upon recent enforcement policy activism of US states and countries within the EU
towards unauthorized workers, we examine the overlap of centralized (federal) and decentralized
(state or regional) enforcement of immigration policies in a spatial context.
This paper studies the effects of interregional spillovers from the government spending component of the American Recovery and Reinvestment Act of 2009 (the Recovery Act). Using
cross-county Census Journey to Work commuting data, we cluster U.S. counties into local labor markets, each of which we further partition into two subregions.
This paper explores the contribution of the structural transformation and urbanization process in the housing market in China. City migration flows combined with an
inelastic land supply, due to entry restrictions, has raised house prices.
This article develops time-series models to represent three alternative, potential monetary policy regimes as monetary policy returns to normal. The first regime is a return to the high and volatile inflation rate of the 1970s.
A model is constructed in which households and banks have incent-
ives to fake the quality of collateral. These incentive problems matter
when collateral is scarce in the aggregate when real interest rates are
Using retrospective data, we introduce evidence that occupational exposure significantly affects disability risk. Incorporating this into a general equilibrium model, social disability insurance (SDI) affects welfare through (i) the classic, risk-sharing channel and (ii) a new
channel of occupational reallocation.
This paper studies the effect of government stimulus spending on a novel aspect of the labor market: the differential impact of spending on the total wage bill versus employment. We analyze the 2009 Recovery Act via instrumental variables using a new instrument, the spending done by federal agencies that were not instructed to target funds towards harder hit regions.
China’s housing prices have been growing nearly twice as fast as national income over the past decade, despite a high vacancy rate and a high rate of return to capital. This paper interprets China’s housing boom as a rational bubble emerging naturally from its economic transition.