Economics

A host of recent studies show that attention allocation has important economic consequences. This paper reports the first empirical test of a cost-benefit model of the endogenous allocation of attention. The model assumes that economic agents have finite mental processing speeds and cannot...

International Macroeconomics has long sought an explanation for current account fluctuations that matches the data. The approaches have typically focused on better models and new macroeconomic variables. We demonstrate the limitations of this approach by showing that idiosyncratic shocks are an...

Economics

Chapter 1 analyzes the theoretical and quantitative implications of optimal fiscal policy in a business cycle model with incomplete markets. I first consider the problem of a government facing expenditure shocks in an economy where the only asset is a real risk-free bond. The model features a...