We argue that discretionary monetary policy exposes the economy to welfare-decreasing instability. It does so by creating the potential for private expectations about the response of monetary policy to exogenous shocks to be self-fulfilling. Among the many equilibria that are possible, some have...

We investigate the effects of employer-provided health insurance on the labor supply of married women. Because health benefits commonly are restricted to full-time workers, wives who prefer to work short hours but have no alternate source of insurance may work long hours in order to acquire...

This paper analyzes how political stability depends on economic factors. Fluctuations in groups' economic capacities and in their abilities to engage in rent-seeking or predatory behavior create periodic incentives for those groups to renege on their social obligations. A constitution remains in...

This paper develops a measure of the immediate effect on the federal funds rate of an open market operation. Because open market operations are often responses to current or anticipated economic developments, there is a serious problem of simultaneous equations bias in measuring this effect....

No. In many VARs, monetary policy shocks are identified with the least squares residuals from a regression of the federal funds rate on an assortment of variables. Such regressions appear to be structurally fragile and are at odds with other evidence on the nature of the Fed's reaction function;...