Economics and ethics both offer important perspectives on our society, but they do so from two different viewpoints - the central focus of economics is how the price system in our economy values resources; the central focus of ethics is the moral evaluation of actions in our society. The rise of...

We show that capital flows to emerging market economies create externalities that differ by an order of magnitude depending on the state-contingent payoff profile of the flows. Those with pro-cyclical payoffs, such as foreign currency debt, generate substantial negative pecuniary externalities...

In an interconnected world, national economic policies regularly lead to large international spillover effects, which frequently trigger calls for international policy cooperation. However, the premise of successful cooperation is that there is a Pareto inefficiency, i.e. if there is scope to...

Large language models (LLMs) have seen remarkable progress in speed, cost efficiency, accuracy, and the capacity to process larger amounts of text over the past year. This article is a practical guide to update economists on how to use these advancements in their research. The main innovations...

This paper examines the profound challenges that transformative advances in AI towards Artificial General Intelligence (AGI) will pose for economists and economic policymakers. I examine how the Age of AI will revolutionize the basic structure of our economies by diminishing the role of labor,...

Large language models (LLMs) such as ChatGPT have the potential to revolutionize research in economics and other disciplines. I describe 25 use cases along six domains in which LLMs are starting to become useful as both research assistants and tutors: ideation, writing, background research, data...

This paper examines the evolving structure and competition dynamics of the rapidly growing market for foundation models, with a focus on large language models (LLMs). We describe the technological characteristics that shape the AI industry and have given rise to fierce competition among the...

We examine the effectiveness of capital controls versus macroprudential regulation in reducing financial fragility in a small open economy model in which there is excessive borrowing because of externalities associated with financial crises and contractionary exchange rate depreciations. We find...

We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand....

Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation center stage. We develop a model in which the financial sector benefits from risk-taking by earning greater expected returns. However,...