Using the framework of Desmet and Rossi-Hansberg (2009), we present a model of spatial takeoff that is calibrated using spatially-disaggregated occupational data for England in c.1710. The model predicts changes in the spatial distribution of agricultural and manufacturing employment which match...

In this paper, we examine the impact that changes in the rate of money creation and reserve requirements have on real seigniorage revenue. We consider two additional features that differ from previous analyses. First, the model economies grow endogenously, and that growth depends on the...

It is well known that if there are mild sector-specific externalities, then the steady state of the standard two-sector real business cycle model can become indeterminate and endogenous business cycles can arise. We show that this result is not robust to the introduction of standard...

When capital-skill complementarity is present in the production process, changes in the skill premium are driven not only by changes in the ratio of unskilled- to skilled labor inputs (as they are in the case with Cobb-Douglas production), but also by changes in the capital-skill ratio. A simple...

This paper uses the Triples test of Randles et al (1980) to detect asymmetries in US as well as international GDP fluctuations. The test does not detect any asymmetry in the distribution of the US GDP, which is consistent with previous empirical findings. However, significant asymmetries are...

We show that a model with knowledge capital can generate business cycles driven by expectations of future movement in total factor productivity (TFP). These cycles are characterized by a boom in which consumption, investment, output and hours-worked all rise in advance of any movement in TFP. We...

This paper formulates and estimates a three-shock US business cycle model. The estimated model accounts for a substantial fraction of the cyclical variation in output and is consistent with the observed inertia in inflation. This is true even though firms in the model reoptimize prices on...

We examine the driving forces of G-7 business cycles. We decompose national business cycles into common and nation-specific components using a dynamic factor model. We also do this for driving variables found in business cycle models: productivity; measures of fiscal and monetary policy; the...

Recent cyclical episodes in the U.S. and G-7 economies are asymmetric: recoveries and expansions tend to be long and gradual and busts tend to be short and sharp. A large body of work views the two recent cyclical U.S. episodes, namely, the "new economy" boom in the late 1990s, and the 2000s...

This paper modifies the standard one-sector stochastic growth model in an effort to explain the observed low procyclicality of the aggregate real wage in the US. The modifications include labor market matching with Nash-bargaining of wages and preferences as introduced in the literature by...