The model we explore is in the spirit of Hopenhayn (1992) and, more directly, an extension of Clementi and Palazzo (2010). Our interest here is to better understand how selection reshapes the dynamics of macro aggregates in a general equilibrium setting with realistic firm-level investment...

An extension of our basic model introduces sectoral production and endogenises the set of sectors active at any time. This allows us to address cross-country evidence on the higher relative price of investment

We develop a monetary model that is unique in its ability to deliver a negative correlation between aggregate consumption growth and short-term real interest rates consistent with U.S. data. The essential ingredient to this success is endogenous asset market segmentation permitting the extent of...

What accounts for the sharp increase in the number of hours worked by married women? Although the number of hours worked per person in the U.S. has changed very little over the past 60 years, the labor force has undergone some pronounced shifts over that same period. One prominent change is this...

The popular press would lead us to believe that during the stock market boom of the 1990s just about everyone was buying and selling bonds every day. In fact, evidence shows that most households make only infrequent changes to their investment portfolios. "In The Role of Market Segmented Markets...

We develop an equilibrium business cycle model where nonconvex delivery costs lead firms to follow (S, s) inventory policies. Calibrated to postwar US data, the model reproduces two-thirds of the cyclical variability of inventory investment. Moreover, it delivers strongly procyclical inventory...

Living standards, as measured by average income per person, vary widely across countries. Differences in income result in large disparities in spending on goods and services by people living in different economies. What makes some countries rich and others poor? Furthermore, what determines...

Changes in the stock of firms' inventories are an important component of the business cycle. In fact, discussion about the timing of a recovery following a recession often focuses on inventories. In "The Role of Inventories in the Business Cycle," Aubhik Khan surveys the facts about inventory...