We propose a methodology for measuring the size and properties of the shadow economy. We use a two-sector dynamic deterministic general equilibrium model with four different trends: hours worked, investment-specific productivity, formal productivity, and shadow productivity. We find that the...

Dynamic stochastic general equilibrium (DSGE) models have become the workhorse of modern macroeconomics and the standard way to communicate ideas among applied macroeconomists. Undergraduate students, however, often remain unaware of their existence. The lack of specialized knowledge can hurt...

We provide estimates of U.S. government expenditure multipliers for defense and non-defense spending over 1939-2014, using a fairly standard DSGE model that includes anticipated military spending changes ("war news shocks"), and find the following. First, our model's war news shocks compare...

We provide estimates of the size and dollar value of shadow economy for a set of countries between 1950 and 2015, following the methodology of Solis-Garcia and Xie (2018).

Why is GDP more volatile in developing countries? In this paper we propose an explanation that can account for the substantial differences in the volatility of measured real GDP per capita between developing and developed countries. Our explanation involves the often overlooked fact that...

We propose a methodology for measuring the size and properties of the shadow economy. We use a two-sector dynamic deterministic general equilibrium model with four different trends: hours worked, investment-specific productivity, formal productivity, and shadow productivity. We find that the...

Theoretical models of the informal sector mostly assume—or end up with—a positive correlation between a measure of taxes and the size of the informal sector. However, some recent empirical studies associate higher taxes with a smaller informal sector size. In this paper, we build a...