Consumers often exhibit behavioral cycles with alternating abstinence and indulgence over time. In the framework of tempting good consumption under limited willpower, we develop a simple model of the self-control cycles. To do so, based on the empirically relevant property of self-control, we...

I develop a methodology for Bayesian estimation of globally solved, non-linear macroeconomic models. A novel feature of my method is the use of a mixture density network to approximate the distribution of initial states. I use the methodology to estimate a medium-scale, two-agent New Keynesian...

Timely updates of business cycle fluctuations-commonly represented by movements in the output gap-help policymakers make informed decisions on the appropriate course of action. Unfortunately, business cycle assessments often suffer from lags in actual gross domestic product data releases. This...

By applying a simple dynamic general equilibrium model without exogenous shocks inhabited by infinitely lived capitalists and workers, we show that a higher degree of relative risk aversion can destabilize an economy. In traditional real business cycle (RBC) theory, a higher degree of relative...

This paper examines the inflationary episode of 1603 in Spain through the lens of Austrian Economic Theory. The study focuses on the effects of monetary expansion caused by the influx of precious metals from the Americas and its impact on real wages and raw material prices. Through the analysis...

This paper introduces a general method for computing aggregate fluctuations in economies with private information. Instead of the cross-sectional distribution of agents across individual states, the method uses as a state variable a vector of spline coefficients describing a long history of past...

This paper proposes a unified framework to study the permanent and transitory origins of US economic fluctuations. The model provides a reasonable account of the evolution of the economy in the post-war period and of the recent inflation episode. Overall, it constitutes a comprehensive framework...

We present an Uncertainty Perception Indicator (UPI) for Germany based on the dynamic topic modelling technique RollingLDA. In contrast to conventional LDA, where all data is processed in one go, the recursive structure of RollingLDA ensures that data is made available for modeling as soon as it...

We extend a dynamic investment model that captures the conjoint effect of ambiguity and the business cycle on the investment threshold and endogenous investment quantity choice. This paper focuses on investment strategies under the combined effects of ambiguity and business cycles. We reveal...

We forecast recessions in Canada using an autoregressive (AR) probit model. In this model, the presence of the lagged latent variable, which captures the autocorrelation in the recession binary variable, results in an intractable likelihood with a high dimensional integral. Therefore, we employ...

Households in emerging economies are subject to significant income risk and have low access to financial markets. Leveraging multiple administrative microdata sources, this paper documents significant heterogeneity in asset holdings, income, and income cyclicality across the distribution of...

This note reviews the literature on the complex relationship between gender and business cycles. It focuses on nuanced patterns that challenge the notion of gender neutrality in economic fluctuations. The note also analyzes dimensions, such as unemployment, income risk, hours worked, and...

Business cycle models often abstract from persistent household heterogeneity, despite its potentially significant implications for macroeconomic fluctuations and policy. We show empirically that the likelihood of being persistently financially constrained decreases with cognitive skills and...

We study the role of heterogeneity in the revenues of individual firms for euro area macroeconomic dynamics. To this end, we specify two models: a standard aggregate vector autoregressive model (VAR) and an "heterogeneous VAR" (HVAR). The VAR model includes only aggregate data, while the HVAR...

Mainstream Macroeconomics has withdrawn completely from its remote origins in Keynes and Kalecki, replacing the principle of effective demand (P.E.D.) with supply economics, investment with savings, and dynamics with equilibrium as a norm This article discusses, in the event of Kalecki’s...

We discover sentiment-driven equilibria in popular models of imperfect risk sharing. In these equilibria, sentiment dynamics behave like uncertainty shocks, in the sense that self-fulfilled beliefs about volatility drive aggregate fluctuations. Because such fluctuations can decouple from the...

This study extends the concept of granularity from firms to cities, examining how large cities influence national economic dynamics beyond their relative size. By applying Zipf's law, which describes the power law distribution of city sizes, we investigate the interplay between granularity and...

Elevated inflation can threaten the credibility of central banks and increase the risk that inflation expectations do not remain anchored. Wage-price spirals might develop in such an environment, and high inflation could become entrenched. We quantitively assess the risks of a wage-price spiral...

‘The Theory of Economic Development’ is still one of the most famous and influential books in the entire field of economics. This book was published when Joseph Schumpeter was only 28 years old and he considered it to be his seminal work. Since this book’s publication, Schumpeter’s...