Immigration is often blamed for increasing unemployment among local workers. However, standard models, such as the neoclassical model and the Diamond-Mortensen-Pissarides matching model, inherently assume that immigrants are absorbed into the labor market without affecting local unemployment....

This paper proposes a theory of price rigidity consistent with survey evidence that firms stabilize prices out of fairness to their consumers. The theory relies on two psychological assumptions. First, customers care about the fairness of prices: fixing the price of a good, consumers enjoy it...

This paper develops a theory of promotion based on evaluations by the already promoted. The already promoted show some favoritism toward candidates for promotion with similar beliefs, just as beetles are more prone to eat the eggs of other species. With such egg-eating bias, false beliefs may...

We develop a theory of optimal unemployment insurance (UI) that accounts for workers' job-search behavior and firms' hiring behavior. The optimal replacement rate of UI is the conventional Baily [1978]-Chetty [2006] rate, which solves the trade-off between insurance and job-search incentives,...

At the zero lower bound, the New Keynesian model predicts that output and inflation collapse to implausibly low levels, and that government spending and forward guidance have implausibly large effects. To resolve these anomalies, we introduce wealth into the utility function; the justification...

We develop a theory of optimal unemployment insurance (UI) that accounts for workers' job-search behavior and firms' hiring behavior. The optimal replacement rate of UI is the conventional Baily [1978]-Chetty [2006a] rate, which solves the trade-off between insurance and job-search incentives,...