We document changes to the pattern of technology shocks and their propagation in post-war U.S. data. Using an agnostic identification procedure, we show that the dominant shock driving total factor productivity (TFP) is akin to a diffusion or news shock and that shock transmission has changed...

Recent research shows that observed labor market flows can be explained in search and matching models only by assuming either implausibly large productivity shocks (Hall 2003) or an excessively high degree of real wage rigidity even for new hires (Shimer 2003). If this is not the case, the...

There is considerable disagreement in the empirical macro literature as to the degree of returns to scale in U.S. output. While many studies find evidence of a small degree of increasing returns, standard errors are typically large. This issue is of importance for assessing the possibility of...

This paper analyzes the specific role of fiscal policy on the welfare effects of macroeconomic stabilization policies. We extend current DSGE models à la Schmitt-Grohè and Uribe (2003) to a non-tandard fiscal policy framework. We focus on distortionary and progressive taxation which alters the...

We derive and estimate a New Keynesian Phillips curve (NKPC) in a model where consumers are assumed to have deep habits. Habits are deep in the sense that they apply to individual consumption goods instead of aggregate consumption. This alters the NKPC in a fundamental manner as it introduces...

We derive and estimate a New Keynesian Phillips curve (NKPC) in a model where consumers are assumed to have deep habits. Habits are deep in the sense that they apply to individual consumption goods instead of aggregate consumption. This alters the NKPC in a fundamental manner as it introduces...

I specify a simple search and matching model of the labor market and estimate it on unemployment and vacancy data for Hong Kong over the period 2000-2010 using Bayesian methods. The model fits the data remarkably well. The estimation shows that the main driver of fluctuations in the labor market...

The "unemployment gap" is an important factor in monetary policy decisions. But the size of the gap depends on the level of natural rate of unemployment, which is inherently unobservable. The uncertainty surrounding estimates of the natural rate, and the costs of mismeasuring it, may recommend a...

We introduce inventories into a standard New Keynesian Dynamic Stochastic General Equilibrium model to study the effect on the design of optimal monetary policy. The possibility of inventory investment changes the transmission mechanism in the model by de-coupling production from final...