This paper (i) estimates the local effects of government stimulus spending on labor market
outcomes and (ii) shows how these effects can be obtained from a firm's optimal policy in the
presence of costs to hiring workers.
This paper provides a theory to explain the paradoxical features of the great housing
boom in China —the persistently faster-than-GDP housing price growth, exceptionally
high capital returns, and excessive vacancy rates.
The 1950s are often pointed to as a decade in which the Federal Reserve operated a particularly
successful monetary policy. The present paper examines the evolution of Federal Reserve monetary
policy from the mid-1930s through the 1950s in an effort to understand better the apparent success of
policy in the 1950s.
A model of money, credit, and banking is constructed in which the differential pledgeability of collateral and the scarcity of collateralizable wealth lead to a term premium — an upward-sloping nominal yield curve.
Event studies show that Fed unconventional announcements of forward guidance and large scale
asset purchases had large and desired effects on asset prices but do not tell us how long such
In 2005, reforms made formal personal bankruptcy much more costly. Shortly after, the US
began to experience its most severe recession in seventy years, and while personal bankruptcy
rates rose, they rose only modestly given the severity of the rise in unemployment.
This paper examines the stimulative effect of central bank forward guidance—the promise
to keep future policy rates lower than its policy rule suggests—when the short-term nominal
interest rate is stuck at its zero lower bound (ZLB).
Mortgage loans are a striking example of a persistent nominal rigidity. As a result, under
incomplete markets, monetary policy affects decisions through the cost of new mortgage
borrowing and the value of payments on outstanding debt.
The consensus in monetary policy circles that the Fed’s large-scale asset purchases, known as quantitative easing (QE), have significantly reduced long-term yields is due in part to event studies, which show that long-term yields decline on QE announcement days.
The nature of the business cycle appears to have changed. Prior to the 1990s, recoveries
from recessions were quick and steep; after the past three recessions, however, recoveries were
weak and prolonged.
We study the use of intermediated assets as media of exchange in a neo-
classical growth model. An intermediary is delegated control over productive
capital and finances itself by issuing claims against the revenue generated by
We use a general equilibrium finance model that features explicit government purchases
of private debts to shed light on some of the principal working mechanisms of the Federal
Reserve’s large-scale asset purchases (LSAP) and their macroeconomic effects.
We develop a theory of labor quality based on (i) the division of the labor force
between unskilled and skilled workers and (ii) investments in skilled workers. In our
theory, countries differ in two key dimensions: talent and total factor productivity