This chapter assesses how models with search frictions have shaped our understanding of aggregatelabor market outcomes in two contexts: business cycle fluctuations and long-run (trend) changes. Wefirst consolidate data on aggregate labor market outcomes for a large set of OECD countries. We...

Carbon control policies in OECD countries commonly differentiate emission prices in favor of energy-intensiveindustries. While leakage provides a efficiency argument for differential emission pricing, the lattermay be a disguised beggar-thy-neighbor policy to exploit terms of trade. Using an...

In addition to traditional forms of private and public medical insurance, two other large programshelp pay for costs associated with ill health. In 2007, Workers Compensation (WC) insurance provided$55.4 billion in medical care and cash benefits to employees who are injured at work or contract...

How important is financial development for economic development? A costly state verification modelof financial intermediation is presented to address this question. The model is calibrated to match factsabout the U.S. economy, such as intermediation spreads and the firm-size distribution for the...

Much recent research has focused on the development and analysis of extensions of the New Keynesianframework that model labor market frictions and unemployment explicitly. The present paper describessome of the essential ingredients and properties of those models, and their implications for...

This essay discusses the policy debate concerning optimal taxation and the distribution of income.It begins with a brief overview of trends in income inequality, the leading hypothesis to explain thesetrends, and the distribution of the tax burden. It then considers the framework that economists...