Showing papers in "Review of Economic Dynamics in 2008"

TL;DR: In this paper, the authors formulate a version of the growth model in which production is carried out by heterogeneous establishments and calibrate it to US data, and argue that differences in the allocation of resources across establishments that differ in productivity may be an important factor in accounting for cross-country differences in output per capita.

TL;DR: In this article, a simple growth model with an endogenous size distribution of production units was developed to systematically study policies of this class and found that these effects are potentially large: policies that reduce the average size of establishments by 20% lead to reductions in output and output per establishment up to 8.1% and 25.6% respectively, as well as large increases in the number of establishments.

TL;DR: In this article, the authors estimate and simulate a sticky-price dynamic stochastic general-equilibrium model with a financial accelerator, a la Bernanke et al. [1998], and find that the importance of the financial accelerator for output fluctuations is relatively minor.

TL;DR: In this article, the authors measure the income shares of capital and labor at the sectoral level for the US economy and decompose the capital shares into the income share of land, structures, and equipment.

TL;DR: In this paper, the differences in the cost of housing services for renters and homeowners were studied and the bias that results when they value owner-occupied housing services using a rental equivalence approach.

TL;DR: In this article, the substitutions between home and market production over long periods of time were studied and the results were used to get predictions about long-run trends in aggregate market hours of work and about employment shifts across economic sectors, driven by uneven TFP growth in market and home production.

TL;DR: In this paper, the authors propose an analytical approach to solve the multivariate permanent income model with rational inattention and examine its implications for optimal consumption, saving, and welfare.

TL;DR: This article showed that changes in the terms of trade have no first-order effect on productivity when output is measured as chain-weighted real GDP, and showed that measures of real income change with the changes in trade at business cycle frequencies and during financial crises.

TL;DR: In this paper, a Bewley model with an entrepreneurial sector and occupational heterogeneity is proposed to study important channels through which fiscal policies affect aggregate variables, factor prices, wealth distribution and welfare.

TL;DR: The authors showed that the expectation effect under the dovish policy regime is quantitatively more important than that under the hawkish policy regime, and that the possibility of regime shifts in monetary policy can have important effects on rational agents' expectation formation and on equilibrium dynamics.

TL;DR: In this paper, the authors explore the quantitative implications of uncertainty about the length of life and a lack of annuity markets for life cycle consumption in a general equilibrium overlapping generations model in which markets are otherwise complete.

TL;DR: In this article, the second best optimal policy in a general equilibrium model of growth with renewable natural resources is studied, where the government uses distorting taxes to finance infrastructure services and cleanup policy.

TL;DR: The authors presented a unified framework where the dynamics of both skill accumulation and wage inequality arise as an equilibrium outcome driven by measured investment-specific technological change, and examined the quantitative effects of some hypothetical tax-policy reforms on skill accumulation, wage inequality, and welfare.

TL;DR: In this paper, the authors simulate the privatization of social security in an economy populated by overlapping generations of individuals that have time-consistent or time-inconsistent preferences, face mortality and individual income risk as well as borrowing constraints.

TL;DR: In this article, the authors characterize the optimal sequential choice of monetary policy in economies with either nominal or indexed debt, and show that the sequential optimal policy converges to a time-consistent steady state with positive or negative debt, depending on the value of the intertemporal elasticity of substitution.

TL;DR: The authors analyzes the effects of intergenerational conflict on capital and labor income tax rates, transfers, and government spending in a model of multidimensional policy choice, showing that the different nature of tax liabilities for the young and the old can explain why the old receive large gross lump-sum transfers through social security, while the young receive little or none.

TL;DR: In this article, the Cobb-Douglas aggregator is used to model the trade-off between tradable and nontradable goods in investment, showing that the relative price of nontradables correlates positively with income and exhibits large differences across space and time.

TL;DR: In this article, the authors apply the business cycle accounting methodology introduced by Chari, Kehoe and McGrattan to the UK economy and examine the cyclical episode from 1979 to 1989, finding that distortions in the labor-leisure decision played a significant role in both the recession in the early 1980s and the subsequent recovery of UK economy.

TL;DR: In this paper, the role of entry and exit in the short run behavior of a general equilibrium model with industry dynamics is studied. But the authors focus on the transition dynamics of the economy after shocks.

TL;DR: Fortran 90 code for the different satges of the computational procedure, and Matlab program to treat and display the generated data.

TL;DR: In this article, the authors present an endogenous growth model where innovations are factor saving and the gains derived from factor saving innovations depend on factor abundance, biased innovations respond to changes in factors' supply, and as the economy becomes more capital abundant agents try to use capital more intensively.

TL;DR: In this article, the authors study the effect of recursive least squares and constant gain learning on asset pricing in a general equilibrium framework and conclude that in the context of these two commonly used models, standard linear self-referential learning does not resolve the asset pricing puzzles observed in the data.

TL;DR: This article showed that when the standard matching model is extended to allow for worker heterogeneity, it exhibits considerably greater volatility and that marginal workers, whose productivity only slightly exceeds the value of their alternative use of time, constitute a disproportionate share of unemployment on average, and that share rises when aggregate conditions deteriorate.

TL;DR: In this article, the authors build a neoclassical growth model with overlapping dynasties and capital-skill complementarities to evaluate changes in immigration policy, and quantify the differential effects of skilled and unskilled immigration on factor returns and on the welfare of different sectors of the population.

TL;DR: In this article, the authors used a neo-classical growth model to quantify the impact of the increase in energy prices on the market value of U.S. corporations and found that the model calibrated to match the subsequent decline in energy consumption generated a 24% decline in market valuation.

TL;DR: In this article, the authors present a vertical specialization trade model with an energy-using transportation sector, and show that trade growth slows from 1974 to 1985, when the oil shocks raised transport costs, offsetting falling tariffs.

TL;DR: In this article, the authors introduce a form of boundedly rational inflation expectations in the New Keynesian Phillips curve, where the representative agent is assumed to behave as an econometrician, employing a time series model for inflation that allows for both permanent and temporary shocks.

TL;DR: In this paper, the authors explore the interrelations between global economic growth and the changing composition of trade, and define a global unbalanced growth path as a situation in which there exists a global constant return to capital.

TL;DR: In this paper, a stochastic small open economy neoclassical model is proposed to quantitatively explain the Korean crisis in terms of financial and monetary variables such as exchange rates and interest rates.

TL;DR: In this paper, the authors show that when land ownership is sufficiently concentrated, the landed elite will lobby the government to raise barriers to industrialization in order to protect its rents in the rural economy.