Abstract This paper investigates the determinants of the ability of the yield spread to predict output fluctuations conditional on the short rate. In the model of the paper, this predictive power is contingent on the monetary authority's reaction function. In particular, expectations of monetary...

Abstract Maybe a lot. The ratio of the minimum wage to the average wage enters a Phillips-curve equation with a coefficient that is highly significant, stable, and robust. One interpretation of these results is that the relative level of the minimum wage affects the Non-Accelerating Inflation...

Abstract This paper examines the dynamic interplay between economic growth and fertility as a developed economy moves through two distinct phases: women at home and raising children full time; women entering the work force and raising children part time. Women's relative wages rise with economic...

Abstract We use a matching framework to explore the hypothesis that firing costs are a decreasing function of labor market tightness. Conventional wisdom suggests that differences in employment protection legislation (EPL) cause differences in labor market performance. Our hypothesis suggests a...

Abstract In this paper, we investigate the output composition of the monetary policy transmission mechanism in Japan. The predominant channel through which monetary policy affects output in Japan is usually thought to be the investment channel, namely the process whereby a change in the interest...

Abstract We present an economy composed of many sectors. In each sector, a simple dynamic stochastic game is played between a wage-setting union and many competitive firms that choose employment. Firms are subject to linear workforce adjustment costs whilst the union, along with employment and...

Abstract The empirical test of the New Keynesian Phillips curve is often implemented by estimating a hybrid specification that includes both lagged and future inflation and then by examining whether the estimated coefficient on future inflation is significantly larger than the one on lagged...

Abstract In a seminal contribution Abel, Mankiw, Summers, and Zeckhauser (1989) show that from an aggregate dynamic perspective the US economy is Pareto efficient. We argue that, when applying their test, they implicitly make strong assumptions about the economy's future behavior. We show how...

Abstract Italy makes for an interesting case-study of the impact of socio-cultural variables on economic performance: under a common institutional framework differences in socio-cultural attitudes across Italian provinces correspond to large differences in their economic success. We analyze the...

Abstract In this note, we extend Xie (JET, 1994) to solve analytically the Lucas model with a weak externality in a specific parametric case. In particular, we characterize the shape of imbalance effects in this model. Our results are mostly consistent with the findings of the related...