This paper studies optimal monetary policy responses in an economy featuring sectorial heterogeneity in the frequency of price adjustments. It shows that a central bank facing heterogeneous nominal rigidities is more likely to behave less aggressively than in a fully sticky economy. Hence, the...

We analyze a model of trade between J heterogeneous regions that are creative in the sense of Richard Florida. There are two non-traded final goods that are used for consumption and investment. There is a continuum of inputs that are freely traded between the creative regions. There is no...

Though common stocks are one of the most important assets in an economy, little is known about their demand curves. I estimate demand curves for 144 NYSE stocks using a unique dataset of all orders, including off-equilibrium orders, during three months in 1990-1991. Connecting asset pricing with...

Estimates of price substitution among capital, labor, and energy are critical to numerous policy issues. Estimating factor share equations of the translog production function requires constant returns to scale and competitive factor markets. The present estimates find mixed evidence on these...

We develop a framework to model the shopping and consumption decisions of forward-looking consumers. Assuming that the consumer’s future utility for each product alternative can be characterized by a standard random utility model, we use dynamic programming to determine the optimal consumption...

The value of the elasticity of substitution between labor and capital (σ) is a “crucial” assumption in understanding the secular decline in the labor share of income and long-run growth. This paper develops and implements a new strategy for estimating this crucial parameter by combining a...