The Intertemporal Keynesian Cross
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76 results
Consumption, Savings, and the Distribution of Permanent Income
Working Paper
Rising inequality in the permanent component of labor income, henceforth permanent income, has been a major force behind the secular increase in US labor income inequality. This paper explores the macroeconomic consequences of this... |
A Theory of Foreign Exchange Interventions
Journal Article
We study a real small open economy with two key ingredients: (i) partial segmentation of home and foreign bond markets and (ii) a pecuniary externality that makes the real exchange rate excessively volatile in response to capital flows. Partial...
Positive Long-Run Capital Taxation: Chamley-Judd Revisited
Journal Article
According to the Chamley-Judd result, capital should not be taxed in the long run. In this paper, we overturn this conclusion, showing that it does not follow from the very models used to derive it. For the main model in Judd (1985), we prove that the...
Endogenous Uncertainty and Credit Crunches
Working Paper
We develop a theory of endogenous uncertainty in which the ability of investors to learn about firm-level fundamentals is impaired during financial crises. At the same time, higher uncertainty reinforces financial distress. Through this two-way feedback...
Endogenous Second Moments: A Unified Approach to Fluctuations in Risk, Dispersion and Uncertainty
Journal Article
Many important statistics in macroeconomics and finance—such as cross-sectional dispersions, risk, volatility, or uncertainty—are second moments. In this paper, we explore a mechanism by which second moments naturally and endogenously... |
Imperfect Public Monitoring with a Fear of Signal Distortion
Journal Article
This paper proposes a model of signal distortion in a two-player game with imperfect public monitoring. We construct a tractable theoretical framework where each player has the opportunity to distort the true public signal and each... |
A Dynamic Theory of Lending Standards
Working Paper
We propose a dynamic model of credit markets, in which there is a novel two-way interaction between lending standards and the quality composition of the borrower pool. Borrowers can be of high or low types, and each lender privately decides on its lending...
Micro Jumps, Macro Humps: Monetary Policy and Business Cycles in an Estimated HANK Model
Working Paper
We estimate a Heterogeneous-Agent New Keynesian model with sticky household expectations that matches existing microeconomic evidence on marginal propensities to consume and macroeconomic evidence on the impulse response to a monetary policy shock. Our...
Using the Sequence-Space Jacobian to Solve and Estimate Heterogeneous-Agent Models
Journal Article
We propose a general and highly efficient method for solving and estimating general equilibrium heterogeneous‐agent models with aggregate shocks in discrete time. Our approach relies on the rapid computation of sequence‐space Jacobians—the derivatives of...
Indebted Demand
Journal Article
We propose a theory of indebted demand, capturing the idea that large debt burdens lower aggregate demand, and thus the natural rate of interest. At the core of the theory is the simple yet underappreciated observation that borrowers and savers differ in...
The Saving Glut of the Rich
Working Paper
There has been a large rise in savings by Americans in the top 1% of the income or wealth distribution over the past 35 years, which we call the saving glut of the rich. The saving glut of the rich has been almost as large as the global saving glut, and...