Fiscal sustainability is one of the most pressing policy issues of our time. Yet it remains difficult to quantify. Official debt is plagued with a number of measurement difficulties since its measurement reflects the choice of words, not policies. And forming the fiscal gap-the imbalance in the...

We characterize and demonstrate a solution method for an optimal commodity (sales) tax problem consisting of multiple goods, heterogeneous agents, and a nonconvex policy maker optimization problem. Our approach allows for more dimensions of heterogeneity than has been previously possible,...

Economists have long investigated the cyclical behavior of real wages in order to draw inferences regarding the relative stickiness of prices and wages. Recent studies have adopted techniques intended to identify monetary shocks and examined the response of real wages and output or employment to...

The overlapping generations (OLG) model is an important framework for analyzing any type of question in which age cohorts are affected differently by exogenous shocks. However, as the dimensions and degree of heterogeneity in these models increase, the computational burden imposed by rational...

This paper constructs a model of growth based on Adam Smith's notions of specialization and extent of the market. We seek to explain the following stylized facts. 1) The share of household production in total output has fallen over time as the economy has grown. 2) Services as a percent of GDP...

This paper proposes a method for integrating individual effective tax rates and marginal tax rates computed from a microsimulation (partial equilibrium) model of tax policy with a dynamic general equilibrium (DGE) model of tax policy that can provide macroeconomic analysis or dynamic scores of...

Evidence that real exchange rate dynamics can be described using models which exhibit nonlinear mean reversion has been mounting over the past several years. This paper attempts to better understand the shape of real exchange rate nonlinearity through the use of the smooth transition...

Evidence that real exchange rate dynamics can be described using models which exhibit nonlinear mean reversion has been mounting over the past several years. This paper attempts to better understand the shape of real exchange rate nonlinearity through the use of the smooth transition...

The first chapter addresses the degree to which models which exhibit nonlinear mean reversion, such as the smooth transition autoregressive model, present a resolution to the purchasing power parity puzzle (see Rogoff, 1996). A key contribution of this paper is the development of a method of...

In this paper, the tests of Kapetanios, Shin, and Snell (2003) and Bec, Ben Salem, and Carrasco (2004), which are designed to detect nonstationarity verses globally stationary exponential smooth transition autoregressive (ESTAR) nonlinearity, are extended to allow for a delay parameter, d, that...