This paper is motivated by the observation that investment tends to accelerate when output is around trend. The model used to explain this observation is based on the capacity-constrained production setup in Hansen and Prescott (2001), where capacity is constant over time, and on capital being...

The effects of equipment investment on relative wages and employment of skilled labor are estimated. The basic hypothesis is that such effects are positive, due to the presence of either equipment-skill complementarity or skill advantage in technology adoption. Using a panel data set for a wide...

We investigate the welfare effects of eliminating business cycles in a model with substantial consumer heterogeneity. The heterogeneity arises from uninsurable and idiosyncratic uncertainty in preferences and employment status. We calibrate the model to match the distribution of wealth in U.S....

(Copyright: Elsevier)

We investigate the welfare effects of eliminating business cycles in a model with substantial consumer heterogeneity. The heterogeneity arises from uninsurable and idiosyncratic uncertainty in preferences and employment, where regarding employment, we distinguish among employment and short- and...

How much technological progress has there been in structures? An attempt is made to measure this using panel data on the age and rents of buildings. The data are interpreted with the help of a vintage capital model where buildings are replaced with some chosen periodicity. The results indicate...

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