The low-frequency movements of many economic variables play a prominent role in policy analysis and decision-making. We develop a robust estimation approach for these slow-moving trend processes, which is guided by a judicious choice of priors and is characterized by sparsity. We present some...

A literature debates the explanations for the cyclical properties of emerging markets using either trend shocks (Aguiar and Gopinath 2007) or financial frictions (Neumeyer and Perri 2004; Garcia-Cicco, Pancrazi, and Uribe 2010). We state a formal proposition that makes explicit the parametric...

We explore empirically models of aggregate fluctuations with two basic ingredients: agents form anticipations about the future based on noisy sources of information and these anticipations affect spending and output in the short run. Our objective is to separate fluctuations due to actual...

We offer a structural interpretation of survey measures of consumer confidence. Our approach is based on a simple forward-looking model of consumption. The model decomposes observed consumption uctuations in changes due to fundamentals, and changes due to temporary errors caused by noisy...

Diagnostic expectations constitute a realistic behavioral model of inference. This paper shows that this approach for expectation formation can be productively integrated into the New Keynesian framework. To this end, we start by offering a first technical treatment of diagnostic expectations in...

This paper experimentally examines whether looking at other people´s pricing decisions is a type of heuristic - a decisionmaking rule - that people use even when it is not applicable, as in the case of clearly private value goods. We find evidence that this indeed is the case - an individual´s...

We model a safe asset market with investors valuing safety, investors valuing liquidity, and constrained dealers. While safety investors and liquidity investors can interact symbiotically with offsetting trades in times of stress, we show that liquidity investors' strategic interaction harbors...

In standard Walrasian macro-finance models, pecuniary externalities such as fire sales lead to overinvestment in illiquid assets or underprovision of liquidity. We investigate whether imperfect competition (Cournot) improves welfare through internalizing the externality and find that this is far...