We characterize efficient allocations and business cycle fluctuations in a labor selection model. Due to forward-looking hiring and labor supply decisions, efficiency entails both static and intertemporal margins. We develop welfare-relevant measures of marginal rates of transformation and...

Ramsey models of fiscal and monetary policy with perfectly-competitive product markets and a fixed supply of capital predict highly volatile inflation with no serial correlation. In this paper, we show that an otherwise-standard Ramsey model that incorporates capital accumulation and habit...

We study how the countercyclicality of temporary layoffs affects aggregate unemployment fluctuations, firm entry and exit dynamics, and macroeconomic fluctuations by building a tractable framework with equilibrium unemployment and endogenous firm entry and exit where firms have a choice over...