This introduces the symposium on monetary and macro economics.

This paper examines the properties of efficient sustainable allocations in an environment in which two agents want to share risk, have perfect information about each other, but cannot make commitments about future transfers. I describe as sustainable any allocation that can be supported as a...

This paper uses an example to show that a model that fits the available data perfectly may provide worse answers to policy questions than an alternative, imperfectly fitting model. The author argues that, in the context of Bayesian estimation, this result can be interpreted as being due to the...

In a wide range of economic settings, equilibrium outcomes in pure credit equilibria are known to be Pareto optimal (or Pareto optimal given informational or enforcement limitations). In a series of examples, I demonstrate how the above equivalence result can be used to provide a more complete...

Internal and sovereign debt crises occur together and happen more frequently in economies with weak bankruptcy institutions. This paper provides a novel explanation. Internal crises arise because of the inability to liquidate private debtors when many default. In an optimal contract, a...

Narayana Kocherlakota is Professor of Economics at Stanford University. He works on optimal taxation, social insurance, and the micro-foundations of money.

In this paper, I consider the problem of optimal unemployment insurance in a world in which the unemployed agent's job-finding effort is unobservable and his level of savings is unobservable. I show that the first-order approach is not always valid for this problem, and I argue that the...