We study relative price behavior in an international business cycle model with specialization in production, in which a goods market friction is introduced through transport costs. The transport technology allows for flexible transport costs. We analyze whether this extension can account for the...

Online appendix for the Review of Economic Dynamics article

A number of empirical studies document that marginal cost shocks are not fully passed through to prices at the firm level and that prices are substantially less volatile than costs. We show that in the relative-deep-habits model of Ravn, Schmitt-Grohe, and Uribe (2006), firm-specific marginal...

This paper is concerned with public policy and economic development in a world of interdependent economies. Its objective is to show how the international coordination of economic policy is a means of promoting growth across countries. The analysis is based on a two-country endogenous growth...

This paper evaluates the extent to which a DSGE model can account for the impact of tax policy shocks. We estimate the response of macroeconomic aggregates to anticipated and unanticipated tax shocks in the U.S. and find that unanticipated tax cuts have persistent expansionary effects on output,...

We evaluate the quantitative effects of introducing costs of transporation into an international trade model. We model these costs through the introduction of international transportation services sector. Costs of transportation have substantial long-run effects on welfare and may impact on the...

This paper estimates the dynamic effects of changes in taxes in the United States. We dis- tinguish between the effects of changes in personal and corporate income taxes using a new narrative account of federal tax liability changes in these two tax components. We develop an estimator in which...

Credit Channels in a Liquidity Trap

We study a heterogeneous agents model which combines matching frictions in the labor market with incomplete asset markets and nominal rigidities. Workers can experience job terminations that send them into short term unemployment or more serious job terminations that require a more difficult...