We investigate the welfare implications of changing the mix between capital and labor taxes for a model economy in which heterogeneous households face uninsurable labor income risk. The stochastic process for labor earnings we construct is consistent with empirical estimates of earnings risk,...

I undertake a quantitative investigation into the short run effects of changes in the timing of taxes for a model economy in which heterogeneous households trade only one asset and face a borrowing constraint. This asset market structure implies that the consumption of low wealth households is...

We present a two-country, two-good model in which there do not exist any markets for international trade in financial assets. We compare the predictions of this model to those of two other models, one in which markets are complete and a second in which a single non-contingent bond is traded. We...

I undertake a quantitative investigation into the short run effects of changes in the timing of taxes for model economies in which heterogeneous households face a borrowing constraint. A combination of the distortionary effects of non-lump-sum taxation and the liquidity effects arising from the...

In this paper, we study the impact on the aggregate economy of changes in individual risk and insurance. To this end, we use the analytical framework developed in Heathcote, Storesletten and Violante (2008). Our main finding is that insurable risk increases TFP by improving the allocation of...

Not all meetings, however, necessarily lead to transactions. A match occurs if and only if the sale results in a positive surplus; otherwise, the potential buyer and seller continue to search. The continuation flow values that the prospective buyer and seller bring to the table as well as the...

We conduct a systematic empirical study of cross-sectional inequality in the United States, integrating data from the Current Population Survey, the Panel Study of Income Dynamics, the Consumer Expenditure Survey, and the Survey of Consumer Finances. In order to understand how different...

We conduct a systematic empirical study of cross-sectional inequality in the United States, integrating data from the Current Population Survey, the Panel Study of Income Dynamics, the Consumer Expenditure Survey, and the Survey of Consumer Finances. In order to understand how different...

In recent decades, American workers have faced a rising college premium, a narrowing gender gap, and increasing wage volatility. This paper explores the quantitative and welfare implications of these changes. The framework is an incomplete-markets life cycle model in which individuals choose...