Individuals are born into families that differ in size and managerial skill endowment. Each member of a family has the option to (i) work as a manager in the family firm; (ii) work as a manger in a non-family firm; or (iii) supply non-managerial labor for a wage. We consider two alternative...

We study college enrollment and completion decisions in the presence of risk in individuals' returns to college. Although the human capital acquired through education is irreversible (i.e., it cannot be decumulated or sold off), college education comes with two inherent options: (i) college...

We study the integration process of the North and South Korean economies. Our model incorporates elements that are necessary for explaining closely-related transition experiences (i.e., the growth miracles of East Asia and the post-communist transitions of Eastern Europe). We calibrate the model...

We develop a model of investment with financial constraints and use it to investigate the relation between investment and Tobin's q. A firm is financed partly by insiders, who control its assets, and partly by outside investors. When their wealth is scarce, insiders earn a rate of return higher...

We quantitatively investigate the capacity to collect revenue when the government is constrained to use non-linear (progressive) income taxes. We develop a life-cycle growth model with individual heterogeneity and endogenous labor supply, and explore the degree of tax progressivity that can be...

We present new data documenting medieval Europe's "Commercial Revolution" using information on the establishment of markets in Germany. We use these data to test whether medieval universities played a causal role in expanding economic activity, examining the foundation of Germany's first...

We estimate the full model using Bayesian methods and allow for both determinate and indeterminate equilibria. Our estimates of the resulting equilibria during the Great Inflation of the 1970s reveal that the Fed’s optimal policy response was seen by the private sector as leading to an...

This paper develops a methodology for predicting the impact of trade liberalization on exports by industry (2-digit ISIC) based on the distribution of exports before the reform by product (5-digit SITC). Using the results of Kehoe and Ruhl (2009) that much of the growth in trade after trade...

This paper studies health insurance over the life-cycle with adverse selection to analyze the welfare implications of the Aordable Care Act of 2010 that targets at improving the access to health insurance for the uninsured. For this purpose, this study develops a life-cycle model following...

This paper examines the effects of changes in uncertainty of household income on the macroeconomy. Households face substantial idiosyncratic income risk that is up to two orders of magnitude larger than total factor productivity uncertainty, very persistent and varies substantially over the...