This paper studies the effect that changing demographic patterns have had on the house- hold saving rate in China. We undertake a quantitative investigation using an overlapping generations (OLG) model where agents live for 85 years. Consumers begin to exercise deci- sion making when they are...

We investigate the role of direct public support for education in explaining the post-WWII evolution of college attainment in the U.S. College attainment has surged from the end of WWII until the early 1970s, then declined for about a decade and has been slowly recovering towards the level of...

We develop a new dynamic general equilibrium model of firm location choice that can explain the observed sorting of firms by productivity and is consistent with the observed entry, exit, and relocation decisions of firms within an urban economy. We discuss existence of equilibrium of and...

Asset price data imply a large degree international risk sharing, while aggregate consumption data do not. We evaluate how well a model with fixed costs of exchanging money for assets can account for this discrepancy. In our model, households receive idiosyncratic income shocks, and only a...

We show that the key identifying assumptions underlying the existing approaches to identifying technology shocks in the data are violated in models with heterogeneous capital and labor. We propose a new method to identifying technology shocks in the data in presence of factor heterogeneity and...

We analyze the effects of the observed increased share of delegated capital for trading strategies and equilibrium prices. We introduce delegation into a standard Lucas exchange economy, where in equilibrium some investors trade on their own account, but others decide to delegate trading to...

We propose a way to measure the contribution of search frictions to the level of wage dispersion observed in the data. Using the data from the 1979 cohort of the National Longitudinal Survey of Youth we find that the variance of match qualities between workers and employers accounts for about 6%...

We study optimal fiscal policy in a small open economy (SOE) with sovereign and private default risk. The SOE's government uses linear taxation to fund exogenous expenditures and uses public debt to inter-temporally allocate tax distortions. We characterize a class of environments in which the...

This paper develops a vintage-technology model, in which firms face idiosyncratic uncertainties in nonconvex technology adoption costs. We derive the generalized (S, s) adoption rule yielding the lumpy technology adoption behavior within an otherwise standard model and compute the stationary...

Capital equipment, such as computers and industrial machinery, embodies skill-biased technology and, hence, is complementary to skilled labor. Many countries, by importing a large share of their capital, import skill-biased technology and a rise in the skill premium. In this paper we develop a...