We study the causes and the consequences of limited risk sharing in two areas macroeconomics: the transmission of international business cycles and the welfare effect of taxes. The first two chapters focus on international business cycles, since earlier work has shown that models with perfect...

Over the period 1973-1985, the correlations of GDP, employment and investment between the United States and an aggregate of major trading partners were respectively 0.76, 0.67, and 0.61. Between 1986-1998 the same correlations were much lower: 0.25, -0.19, and 0.16 (real regionalization). At the...

Does macroeconomic volatility/uncertainty affects accumulation of net foreign assets? In OECD economies over the period 1970-2012, changes in country specific aggregate volatility are, after controlling for a wide array of factors, significantly positively associated with net foreign asset...

In this paper, we explore the impact of the Great Recession on economic inequality and redistribution in the United States. We analyze many sorts of inequality (in earnings, disposable income, consumption expenditures and wealth) for different sections of the economic distribution.

We document a strong negative relation in the United States between wealth and aggregate volatility. For example the 1970s and the late 2000s were periods of low asset values and high volatility. The early 1960s and the Great Moderation of the 1980s and 1990s were periods of high asset values...

We then explore whether a simple partial equilibrium Friedman-style permanent income model is consistent with the empirical facts. Our preliminary findings suggest that the PIH model provides a reasonably good approximation of the facts in the data, but only if transitory income shocks are the...

One key feature of the 2008-2009 crisis has been its international dimension, as most countries have experienced large synchronous contractions. The recent crisis has also been characterized by a sharp fall in employment but not in productivity. These two characterizing features of the recent...

In this paper, we present a tractable model of a small open economy where the main driver of international borrowing is investment. Debt is non-state-contingent and the choice of default is endogenous, as in Eaton and Gersovitz (1981). By introducing a simple AK technology, we obtain a setup...