We study a stylized theory of the volatility reduction in the U.S. after 1984---the Great Moderation---which attributes part of the stabilization to less volatile shocks and another part to more difficult inference on the part of Bayesian households attempting to learn the latent state of the...

Set-asides and subsidies are used extensively in government procurement and natural resource sales. Economic theory is ambiguous on how such policies affect both auction participation and auction prices. We study the use of these policies, targeted at small businesses, in the context of U.S....

In the political debate people express the idea that immigrants are good because they can help pay for the old. The paper explores this idea in a dynamic political-economy setup. For this purpose we develop an OLG political economy model of social security and migration. We characterize sub-game...

In the last century, the evolution of female labor force participation has been S-shaped: It rose slowly at first, then quickly, and has leveled off recently. Central to this dramatic rise has been the entry of women with young children. We argue that this S-shaped dynamic came from generations...

We show that dependence on foreign energy can increase economic instability by raising the likelihood of equilibrium indeterminacy, hence making fluctuations driven by self-fulfilling expectations easier to occur. This is demonstrated in a standard neoclassical growth model. Calibration...

This paper proposes a theory of educational attainment differences across U.S. metropolitan areas. The theory is motivated by the finding that employment in business services predicts more than 70% of the observed cross-city variation in education. In the model, agglomeration economies in the...

The analysis will be carried out in a relatively simple set-up, where the various effects of social security, on the prices of long-lived assets and the stock of capital, and hence on output, wages and risky rates of returns, can be clearly identified.

This paper considers a Ramsey model of linear capital and labor income taxation in which a benevolent government cannot commit ex-ante to a sequence of taxes for the future. In this setup, if the government is allowed to borrow and lend to the consumers, the optimal capital income tax is zero in...

This paper shows, within a Heckscher-Ohlin version of the two-sector neoclassical growth model, that land, besides having long-run effects, is also a main determinant of the speed of convergence toward the steady state when there are cross-sector capital share differences. This result stands in...