This paper argues that an important reason why Russia's performance and China's performance under capitalism have differed dramatically is that different arrangements governing the determination of prices and work practices evolved during the transition process. In Russia, the arrangement, which...

In this paper we develop a model in which a country faces a balance of payments crisis if constraints on its international borrowing bind. We use the model to describe the dynamics of the trade balance, capital account, and balance of payments of a country that borrows to finance consumption...

In this note, we demonstrate and analyze the inability of standard neoclassical models to generate accurate estimates of the fiscal multiplier (that is, the macroeconomic response to increased government spending). We then examine whether estimates can be improved by incorporating recently...

Standard neoclassical models are unable to generate large values for the fiscal multiplier, the aggregate economic response to increased government spending. Empirical estimates place the multiplier between 0.7 and 1.0. Standard models deliver figures close to zero. In an earlier policy paper,...

We explore the effects of financial shocks in heterogeneous agent economies with aggregate savings and with frictions in some consumption markets, where demand contributes to productivity. Households of various wealth and earnings levels search for goods at different intensities and pay...

We develop a theory on the joint dynamics of labor share and technology at the business cycle frequency. Our main motivating fact is the overshooting property of the labor share: After a positive technology shock, the share of output that corresponds to labor falls temporarily but it quickly...

This paper develops a new quantitative theory of long-term unsecured credit contracts. Households can default and can switch credit lines. Banks can change the credit limit at any time, but must commit to the interest rate or not depending on the regulatory setting. Without commitment, the...

Between the mid 1970's and the beginning of the 2000's the share of single females grew dramatically in the U.S. (from 21% to 32%). So did the share of single mothers (from 10% to 14%). At the same time relative wages within and between sexes underwent huge changes. In this paper we measure the...