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.
Why did the marriage probability of single females in France after World War 1 rise 50%
above its pre-war average, despite a 33% drop in the male/female singles ratio? We conjecture
that war-time disruption of the marriage market generated an abnormal abundance of
men with relatively high marriage propensities.
The rise of China is no doubt one of the most important events in world economic history since
the Industrial Revolution. Mainstream economics, especially the institutional theory of
development based on a dichotomy of extractive vs. inclusive political institutions, is highly
inadequate in explaining China’s rise.
In U.S. data 1981–2012, unsecured firm credit moves procyclically and tends to lead GDP, while secured firm credit is acyclical; similarly, shocks to unsecured firm credit explain a far larger fraction of output fluctuations than shocks to secured credit.
We use cross-country data and instrumental variables widely used in the literature to show that (i) institutions (such as property rights and the rule of law) do not explain industrialization and (ii) agrarian countries and industrial countries have entirely different determinants for income levels.
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.
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.