This paper analyzes a business cycle model with labor market frictions as well as an extensive labor supply margin. There are exogenous aggregate shocks to productivity, the job finding rate, and the separation rate. Workers also face idiosyncratic productivity (wage) shocks that they cannot...

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This paper builds a theory of the shape of the distribution of total-factor productiv- ity (TFP) across countries. The data on productivity suggests vast differences across countries, and arguably even has "twin peaks". The theory proposed here is consistent with vast differences in long-run...

We model a labor market with search and matching frictions where some or all workers belong to a (centralized) union, both in the case where coverage is exogenously given and where it is endogenous. Unions are assumed to choose identical wages for all unionized workers, and firms are assumed not...

Recent research has been able to measure two forms of technical change---one (fossil) energy-saving and one saving on capital/labor. The results first show strong evidence for "directed technical change" in the sense that the total resources devoted to saving on the inputs responds endogenously...

We analyze the forces that can generate retirement in different versions of standard life cycle models of labor supply. While nonconvexities in production can generate retirement, we show that the size of nonconvexities needed increases sharply as the intertemporal elasticity of substitution for...

In search theory, an important distinction can be drawn between models with directed search and with random /undirected search. In the present paper we first present a simple model of competitive on-the-job search, where firms' productivity differences emerge endogenously through the firms'...

We study a model where households use home equity to finance consumption expenditures and we analyze the macroeconomic consequences of a credit crunch triggered by tightening lending standards.

This paper studies adaptive learning with multiple models. An agent operating in a self-referential environment is aware of potential model misspecification, and tries to detect it, in real-time, using an econometric specification test. If the current model passes the test, it is used to...

In this paper we examine the effect of collateral requirements on the prices of long- lived assets. We consider a Lucas-style infinite-horizon exchange economy with heteroge- nous agents and collateral constraints. There are two trees in the economy which can be used as collateral for short-term...