Boom leads to recession, recession to boom, and the economy is caught in a self-sustaining cycle. Or is it? More recent economic theory states that cyclical fluctuations in the economy are caused by shocks and other disturbances that continually buffet the economy. In this article, Satyajit...

A debtor’s right to have his or her debts dismissed or discharged via a bankruptcy proceeding is referred to as the law’s “fresh start” provision. Fresh start has been — and continues to be — a controversial feature of the U.S. bankruptcy law. Lately, the law has come under scrutiny...

Home equity is the predominant form of savings for most Americans because it helps them save on taxes. However, homeownership also determines how the risks of fluctuations in the value of residential real estate are borne. In this article, Satyajit Chatterjee looks at how the tax benefit of...

Although iron ore mining and public schools may seem to have nothing in common, you may be surprised. Recent research suggests that the labor productivity of ore producers and teachers may respond similarly to competitive pressure. To date, most macroeconomic research on the determinants of...

A particularly troublesome feature of the most recent recession has been the painfully slow growth in employment during the recovery. For employment growth to accelerate, economists believe that firms need to invest in new productive capacity. This view is typically couched in terms of the need...

Since the 1950s economists have been building a theory of aggregate consumer spending, seeking to understand how individual households choose to spend and how their choices change when interest rates, the unemployment rate, and other economic indicators change. Before that time, economists...

Many observers believe that turbulence in asset prices results from bouts of optimism and pessimism among investors that have little to do with economic reality. While psychology and emotions are no doubt important motivators of human actions, an explanation for asset price booms and busts that...