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Imperfect Macroeconomic Expectations: Evidence and Theory NBER Macroeconomics Annual (IF 5.385) Pub Date : 2021-05-01 George-Marios Angeletos,Zhen Huo,Karthik A. Sastry
The rational expectations hypothesis is a bedrock of modern macroeconomics. It is often combinedwith a strong, complementary hypothesis that all data about the state of the economy are common knowledge. But an explosion of recent theoretical and empirical work has questioned both premises. This has pushed the discipline back toward reckoning with the “wilderness” of alternative models for expectations
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What Do We Learn from Cross-Regional Empirical Estimates in Macroeconomics? NBER Macroeconomics Annual (IF 5.385) Pub Date : 2021-05-01 Adam Guren,Alisdair McKay,Emi Nakamura,Jón Steinsson
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Diverging Trends in National and Local Concentration NBER Macroeconomics Annual (IF 5.385) Pub Date : 2021-05-01 Esteban Rossi-Hansberg,Pierre-Daniel Sarte,Nicholas Trachter
Most product markets are local. The reason is simply that the transportation of goods and people is costly so firms set up production plants, distribution centers, and stores close to customers. In turn, individuals locate in areas where they can obtain the goods they desire. A coffee shop or restaurant in Manhattan does not compete with similar establishments in Seattle and probably not even in Brooklyn
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The Glass Ceiling and the Paper Floor: Changing Gender Composition of Top Earners since the 1980s NBER Macroeconomics Annual (IF 5.385) Pub Date : 2021-05-01 Fatih Guvenen,Greg Kaplan,Jae Song
Since the late 1970s, the US earnings distribution has experienced profound changes. Among these changes, two of the most well-known are the increasing share of total earnings that accrues to top earners (i.e., individuals in the top 1% or top 0.1% of the earnings distribution) and the continued relative absence of women from this top-earning group. This latter phenomenon is commonly referred to as
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Sources of US Wealth Inequality: Past, Present, and Future NBER Macroeconomics Annual (IF 5.385) Pub Date : 2021-05-01 Joachim Hubmer,Per Krusell,Anthony A. Smith.
The distribution of wealth in most countries for which there is reliable data is strikingly uneven. There is also recent work suggesting that the wealth distribution has undergone significant movements over time, most recently with a large upward swing in dispersion in several AngloSaxon countries (Piketty 2014; Saez and Zucman 2016). For example, according to the estimates in Saez and Zucman (2016)
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From Good to Bad Concentration? US Industries over the Past 30 Years NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Matias Covarrubias, Germán Gutiérrez, Thomas Philippon
We study the evolution of profits, investment, and market shares in US industries over the past 40 years. During the 1990s, and at low levels of initial concentration, we find evidence of efficient concentration driven by tougher price competition, intangible investment, and increasing productivity of leaders. After 2000, however, the evidence suggests inefficient concentration, decreasing competition
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Trading Up and the Skill Premium NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Nir Jaimovich, Sergio Rebelo, Arlene Wong, Miao Ben Zhang
We study the impact on the skill premium of increases in the quality of goods consumed by households (“trading up”). Our empirical work shows that high-quality goods are more intensive in skilled labor than low-quality goods and that household spending on high-quality goods rises with income. We propose a model consistent with these facts. This model accounts for the past rise in the skill premium
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Chad Syverson
Macroeconomics has become interested inmarket power.A series of studies over the past few years has documented a set of possibly interrelated, broad-based, and decades-long trends: increased market concentration, higher profit rates, higher measured price-cost markups, decreased investment rates, reduced firm entry and factor market dynamism, and a fall in labor’s share of income. If one wanted to
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Editorial NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Martin Eichenbaum, Erik Hurst, Jonathan A. Parker
The NBER’s thirty-fourth Annual Conference on Macroeconomics brought together leading scholars to present, discuss, and debate six research papers on central issues in contemporary macroeconomics. In addition, James Stock, former chief economist and director of research at the International Monetary Fund, delivered a thought-provoking afterdinner talk on the economics of climate change. Video recordings
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Climate Change, Climate Policy, and Economic Growth NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 James H. Stock
The topics of climate change and climate change policy encompass a complex mixture of the natural sciences, economics, and a mass of institutional, legal, and technical details. This complexity and multidisciplinary nature make it difficult for thoughtful citizens to reach their own conclusions on the topic and for potentially interested economists to know where to start. This essay aims to provide
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Matthew Rognlie
Recently, I had a dream where I was trying to explain supply and demand to an audience of intransigent economists.How could I say that demand curves sloped downward, they asked, when for so many goods, a simple plot of quantity demanded against price showed the opposite? How could these curves be useful concepts when, even by the most generous account, their parameters shifted from year to year? I
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Marc P. Giannoni
Since Phillips (1958), economists have sought to estimate a Phillips curve relationship or a positive relation between inflation,pt, and ameasure of the output gap, xt. Although historically such a relationship could be easily detected, the Phillips curve appears to have flattened in the United Statesmore recently. Some authors have suggested that inflation does not depend on slack, that it is largely
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Jonathan Vogel
The skill premium and inequality, more generally, have increased dramatically in the United States since 1980; see the top panel of figure 1. This rise has coincided with a substantial increase in the relative supply of skilled workers; see the bottom panel of figure 1. To the extent that relative supply and demand shape relative prices, these patterns reveal a sizable skill-biased shift in relative
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Ben S. Bernanke
In 2008, for the first time since the Great Depression, the Federal Reserve encountered the zero lower bound (ZLB) on the nominal interest rate. The Fed’s target rate, the overnight federal funds rate, fell effectively to zero in the fall as the central bank’s emergency lending programs rapidly increased the supply of bank reserves. Then at its December 2008 meeting, the FederalOpenMarketCommittee
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Greg Kaplan
Borella, De Nardi, and Yang (2019) tackle an important question. They consider two cohorts of white, non-college-educated Americans: (i) those born between 1936 and 1945 (referred to as the 1940s cohort), and (ii) those born between 1956 and 1965 (referred to as the 1960s cohort). They consider three differences in the opportunities afforded to these cohorts: (i) potential wages, (ii) life expectancy
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Daron Acemoglu
There is by now a huge literature on the increase in the college premium and other dimensions of inequality in the United States and many other Western nations (see Acemoglu andAutor [2011] for an overview of this literature). As I discuss in the following text, the focal explanation in this literature is that technological changes of the last 4 decades have increased the demand for skills and have
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Janice Eberly
The paper byCovarrubias, Gutiérrez, and Philippon providesmany useful insights into the rapidly emerging literature on rising concentration in US industries. Importantly, it catalogs some important empirical shortcomings in the literature. It also provides clarity on conceptual issues that have created confusion. The paper goes on to make two types of original empirical contributions. In the first
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Richard Blundell
Individuals without a college degree in the United States have experienced a relative decline in labor market and other opportunities. This is especially the case for lower-educated white men who entered the labor market in the early 1980s and after. These trends are not exclusive to the United States; in theUnitedKingdom and elsewhere, thosewithout a college degree have fared poorly since the early
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Mark W. Watson
In this paper, Debortoli, Galı́, and Gambetti offer compelling empirical evidence that extraordinary actions taken by the Federal Reserve were able to shield the macroeconomy from many of the policy constraints associated with the zero lower bound (ZLB) on nominal interest rates. As Debortoli et al. argue, if these extraordinary actions had been ineffective, the United States would have witnessed a
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Optimal Inflation and the Identification of the Phillips Curve NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Michael McLeay, Silvana Tenreyro
Several academics and practitioners have pointed out that inflation follows a seemingly exogenous statistical process, unrelated to the output gap, leading some to argue that the Phillips curve has weakened or disappeared. In this paper, we explain why this seemingly exogenous process arises, or, in other words, why it is difficult to empirically identify a Phillips curve, a key building block of the
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On the Empirical (Ir)Relevance of the Zero Lower Bound Constraint NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Davide Debortoli, Jordi Galí, Luca Gambetti
We evaluate the hypothesis that the zero lower bound (ZLB) constraint was, in practice, irrelevant during the recent ZLB episode experienced by the US economy (the 2009Q1–2015Q4 period). We focus on two dimensions of economic performance that were ex ante likely to have been affected by a binding ZLB: (i) the volatility of macro variables and (ii) the economy’s response to shocks. Using a variety of
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The Lost Ones: The Opportunities and Outcomes of White, Non-College-Educated Americans Born in the 1960s NBER Macroeconomics Annual (IF 5.385) Pub Date : 2020-01-01 Margherita Borella, Mariacristina De Nardi, Fang Yang
White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s; men’s wages declined more than women’s. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Alan J. Auerbach
The tax reform process that culminated in the December 2017 enactment of the Tax Cuts and Jobs Act followed an unusual pattern regarding business tax reform. In particular, the original proposal, the “Blueprint” put forward by Republicans in the House of Representatives in June 2016 (Tax Reform Task Force 2016) called for the adoption of an approach that, at the time, was unfamiliar to many in the
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Robert E. Hall
This ingenious paper by Koslowski, Veldkamp, and Venkateswaran develops a model with two main components. The first is rooted in the financial economics of asset pricing. It describes amechanism linking bad financial experiences to lengthy periods of low riskless interest rates. The second is rooted in corporate finance. It considers features of financial institutions and markets that explain why safe
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Matthew Rognlie
This paper provides the most careful and clearheaded study to date of the factor distribution of income in the United States. Its most important contribution is the introduction of a new concept, “factorless income,” which is the residual after assigning aggregate income to labor and capital. Unlike many other studies, which simply assume that factorless income corresponds to either economic profit
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Juliane Begenau
where the franchise value is the difference between the fair and book value of bank equity. The franchise value is positive when banks can increase the value of their assets above their costs, as captured by the book value, or when banks have a funding advantage. A clever application of a standard valuation technique in finance, the Gordon growthmodel, allows the authors to calculate the model-implied
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 N. Gregory Mankiw
Any well-trained economist is tempted to say that this question is not well posed, or that neither statement is really true, or something like that. But this is meant to be a psychological gauge of one’s predispositions, not an analytic exercise. So humor me and write down your answer. I will get back to it in a minute. Now, back to border taxes. There is no doubt in my mind that the broad issue addressed
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Guido Lorenzoni
“Monetary Policy Analysis When Planning Horizons Are Finite” byMichael Woodford fits in a fast-growing literature that attempts to introduce forms of bounded rationality in macroeconomic models. Bounded rationality can be introduced in a variety ofways, depending on howwe describe the agents’ limited ability to process information, to form forecasts, and to compute optimal plans. The paper I am discussing
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Jennifer La’O
In most macroeconomic models, time is infinite. Agents are endowed with rational expectations including the cognitive ability to solve complex infinite-horizon planning problems. This is a heroic assumption; but when does it matter? In “Monetary Policy Analysis When Planning Horizons Are Finite,” Michael Woodford reconsiders this unrealistic feature, introduces a novel bounded-rationality framework
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Lawrence H. Summers
I salute the authors’ endeavor to usemarket price to examine the riskiness of the financial system and to evaluate the change in the subsidy represented by government guarantees. As illustrated by my work with Natasha Sarin (Sarin and Summers 2016), which the authors reference, I believe that market information is at a minimum a valuable complement to accounting information in evaluating the health
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 François Gourio
The paper by Kozlowski, Veldkamp, and Venkateswaran argues that economic agents rationally revised their estimates of tail risk following the Great Recession and that this revision explains, at least in part, the persistent decline of interest rates on safe and liquid assets such as US Treasury securities. In a previous paper (Kozlowski, Veldkamp, and Venkateswaran 2015), the authors argued that the
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The Macroeconomics of Border Taxes NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Omar Barbiero, Emmanuel Farhi, Gita Gopinath, Oleg Itskhoki
We analyze the dynamic macroeconomic effects of border adjustment taxes (BAT), both when they are a feature of corporate tax reform (C-BAT) and for the case of value-added tax (VAT). Our analysis arrives at the following main conclusions. First, C-BAT is unlikely to be neutral at the macroeconomic level, as the conditions required for neutrality are unrealistic. The basis for neutrality of VAT is even
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Valerie A. Ramey
This fine paper by Charles, Hurst, and Schwartz investigates the link between the post-2000 decline in manufacturing employment and the decline of the employment rate, and also analyzes the supporting roles played by transfer payments, geographic mobility, and opioid use. The paper is a particularly useful synthesis because it brings together threads from a number of other papers, including the authors’
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Richard Rogerson
The title of this paper tells us that the goal of this analysis is to account for something called “factorless income.” Two immediate questions arise. What is factorless income? And why do we need to account for it? Although there are perhaps several motivations that might lead to this analysis, I think one prominent motivation stems from the interest in understanding the secular decline in the labor
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Government Guarantees and the Valuation of American Banks NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Andrew G. Atkeson, Adrien d’Avernas, Andrea L. Eisfeldt, Pierre-Olivier Weill
Banks’ ratio of the market value to book value of their equity was close to 1 until the 1990s, then more than doubled during the 1996–2007 period, and fell again to values close to 1 after the 2008 financial crisis. Some economists argue that the drop in banks’ market-to-book ratio since the crisis is due to a loss in bank franchise value or profitability. In this paper we argue that banks’ market-to-book
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The Transformation of Manufacturing and the Decline in US Employment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Kerwin Kofi Charles, Erik Hurst, Mariel Schwartz
Using data from a variety of sources, this paper comprehensively documents the dramatic changes in the manufacturing sector and the large decline in employment rates and hours worked among prime-age Americans since 2000. We use cross-region variation to explore the link between declining manufacturing employment and labor market outcomes. We find that manufacturing decline in a local area in the 2000s
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The Tail That Keeps the Riskless Rate Low NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Julian Kozlowski, Laura Veldkamp, Venky Venkateswaran
Riskless interest rates fell in the wake of the financial crisis and have remained low. We explore a simple explanation: this recession was perceived as an extremely unlikely event before 2007. Observing such an episode led all agents to reassess macro risk, in particular the probability of tail events. Since changes in beliefs endure long after the event itself has passed, perceived “tail risk” remains
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Accounting for Factorless Income NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Loukas Karabarbounis, Brent Neiman
Comparing US gross domestic product to the sum of measured payments to labor and imputed rental payments to capital results in a large and volatile residual or “factorless” income. We analyze three common strategies of allocating and interpreting factorless income, specifically that it arises from economic profits (case Π), unmeasured capital (case K), or deviations of the rental rate of capital from
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Monetary Policy Analysis When Planning Horizons Are Finite NBER Macroeconomics Annual (IF 5.385) Pub Date : 2019-01-01 Michael Woodford
It is common to analyze the effects of alternative possible monetary policy commitments under the assumption of optimization under rational (or fully model-consistent) expectations. This implicitly assumes unrealistic cognitive abilities on the part of economic decision makers. The relevant question, however, is not whether the assumption can be literally correct, but how much it would matter to model
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Understanding the Great Gatsby Curve NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 Steven N. Durlauf, Ananth Seshadri
The Great Gatsby Curve, the observation that for OECD countries greater cross-sectional income inequality is associated with lower mobility, has become a prominent part of scholarly and policy discussions because of its implications for the relationship between inequality of outcomes and inequality of opportunities. We explore this relationship by focusing on evidence and interpretation of an intertemporal
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Michelson-Morley, Fisher, and Occam: The Radical Implications of Stable Quiet Inflation at the Zero Bound NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 John H. Cochrane
The long period of quiet inflation at near zero interest rates, with large quantitative easing, suggests that core monetary doctrines are wrong. It suggests that inflation can be stable and determinate at the zero bound, and by extension under passive policy including a nominal interest rate peg, and that arbitrary amounts of interest-paying reserves are not inflationary. Of the known alternatives
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 Andrew Caplin
It is a privilege to discuss the vibrant field of survey measurement of probabilistic economic expectations in which Manski has played the essential pioneering role. Validations and other research developments related to these new measurements have been richly presented by Manski (2004), Hurd (2009), and now in Manski’s extensive article for the NBER Macroeconomics Annual. In my review, I take this
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 Giovanni L. Violante
I will organize my discussion in three parts, each corresponding to a separate section. In the first section, I’ll put the question addressed by the authors in the broader context of the literature on the housing crisis. In the second section, I’ll reflect on the identity of the marginal borrowers whose role in the crisis is key to separate alternative explanations. I’ll end this section by arguing
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Credit Market Freezes NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 Efraim Benmelech, Nittai K. Bergman
Credit market freezes in which debt issuance declines dramatically and market liquidity evaporates are typically observed during financial crises. In the financial crisis of 2008–2009, the structured credit market froze, issuance of corporate bonds declined, and secondary credit markets became highly illiquid. In this paper, we analyze liquidity in bond markets during financial crises and compare two
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 Lars Peter Hansen
While the paper has suggestions for a macroeconomic research agenda, it has little to say in terms of specificity of how to embark on this agenda. This is left for others to determine. Survey evidence has long been on the radar screen of macroeconomic research, so I find it valuable to probe what the challenges are to carry out this line of research in a manner that is conceptually appealing and tractable
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Survey Measurement of Probabilistic Macroeconomic Expectations: Progress and Promise NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 Charles F. Manski
Economists commonly suppose that persons have probabilistic expectations for uncertain events, yet empirical research measuring expectations was long rare. The inhibition against collection of expectations data has gradually lessened, generating a substantial body of recent evidence on the expectations of broad populations. This paper first summarizes the history leading to development of the modern
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When Inequality Matters for Macro and Macro Matters for Inequality NBER Macroeconomics Annual (IF 5.385) Pub Date : 2018-04-01 SeHyoun Ahn, Greg Kaplan, Benjamin Moll, Thomas Winberry, Christian Wolf
We develop an efficient and easy to use computational method for solving a wide class of general equilibrium heterogeneous agent models with aggregate shocks together with an open source suite of codes that implement our algorithms in an easy to use toolbox. Our method extends standard linearization techniques and is designed to work in cases when inequality matters for the dynamics of macroeconomic
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Crises in Economic Thought, Secular Stagnation, and Future Economic Research NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Lawrence Summers
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Olivier Blanchard
This is an extremely ambitious paper. The Greek drama is one of the most complex macroeconomic developments of the last 10 years. Before I read the paper, my tight prior was that DSGE models were not at a stage where they could handle the relevant complexity. After reading the paper, my posterior is substantially more favorable. In the right hands, DSGE models can shed light even on such complex developments
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Forward Guidance and Macroeconomic Outcomes since the Financial Crisis NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Jeffrey R. Campbell, Jonas D. M. Fisher, Alejandro Justiniano, Leonardo Melosi
This chapter studies the effects of FOMC forward guidance. We begin by using high-frequency identification and direct measures of FOMC private information to show that puzzling responses of private-sector forecasts to movements in federal funds futures rates on FOMC announcement days can be attributed entirely to Delphic forward guidance. However, a large fraction of futures rates’ variability on announcement
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Macrofinancial History and the New Business Cycle Facts NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Òscar Jordà, Moritz Schularick, Alan M. Taylor
In advanced economies, a century-long, near-stable ratio of credit to GDP gave way to rapid financialization and surging leverage in the last forty years. This “financial hockey stick” coincides with shifts in foundational macroeconomic relationships beyond the widely noted return of macroeconomic fragility and crisis risk. Leverage is correlated with central business cycle moments, which we can document
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Is the Macroeconomy Locally Unstable and Why Should We Care? NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Paul Beaudry, Dana Galizia, Franck Portier
In most modern macroeconomic models, the steady state (or balanced growth path) of the system is a local attractor, in the sense that, in the absence of shocks, the economy would converge to the steady state. In this chapter, we examine whether the time-series behavior of macroeconomic aggregates (especially labor market aggregates) is in fact supportive of this local-stability view of macroeconomic
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Are State- and Time-Dependent Models Really Different? NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Fernando Alvarez, Francesco Lippi, Juan Passadore
Yes, state- and time-dependent models are really different, but only for large monetary shocks. In particular, we show that in a broad class of models where shocks have continuous paths, the propagation of a monetary impulse is independent of the nature of the sticky price friction when shocks are small. The propagation of large shocks instead depends on the nature of the friction: the impulse response
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Jump-Starting the Euro-Area Recovery: Would a Rise in Core Fiscal Spending Help the Periphery? NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Olivier Blanchard, Christopher J. Erceg, Jesper Lindé
We show that a fiscal expansion by the core economies of the euro area would have a large and positive impact on periphery GDP assuming that policy rates remain low for a prolonged period. Under our preferred model specification, an expansion of core government spending equal to 1% of euro-area GDP would boost periphery GDP by over 1%in a liquidity trap lasting three years, nearly half as large as
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The Analytics of the Greek Crisis NBER Macroeconomics Annual (IF 5.385) Pub Date : 2017-01-01 Pierre-Olivier Gourinchas, Thomas Philippon, Dimitri Vayanos
We provide an empirical and theoretical analysis of the Greek crisis of 2010. We first benchmark the crisis against all episodes of sudden stops, sovereign debt crises, and lending booms / busts in emerging and advanced economies since 1980. The decline in Greece’s output, especially investment, is deeper and more persistent than in almost any crisis on record over that period. We then propose a stylized
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Networks and the Macroeconomy: An Empirical Exploration NBER Macroeconomics Annual (IF 5.385) Pub Date : 2016-01-01 Daron Acemoglu,Ufuk Akcigit,William Kerr
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External and Public Debt Crises NBER Macroeconomics Annual (IF 5.385) Pub Date : 2016-01-01 Cristina Arellano,Andrew Atkeson,Mark Wright
The recent debt crises in Europe and the U.S. states feature similar sharp increases in spreads on government debt but also show important differences. In Europe, the crisis occurred at high government indebtedness levels and had spillovers to the private sector. In the United States, state government indebtedness was low, and the crisis had no spillovers to the private sector. We show theoretically
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2016-01-01 Xavier Gabaix
Discussions of published papers are seldom read. Certainly they are almost never cited. So, how to make good use those Macroeconomics Annual pages? I thought it might be useful to write a userfriendly introduction to the ideas underlying Acemoglu, Akcigit, and Kerr’s very interesting paper: the “macro from microshocks” approach that started with Long and Plosser (1983), which is tightly linked to something
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Comment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2016-01-01 Lawrence J. Christiano
A typical firm sells about onehalf of its output to other firms and materials purchases from other firms account for roughly half of the firm’s input costs. The fact that an individual firm’s production occurs within a network of firms is typically ignored by macroeconomists.1 Acemoglu et al. show that the patterns of amplification and propagation of industry shocks predicted by standard network models
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Expectations and Investment NBER Macroeconomics Annual (IF 5.385) Pub Date : 2016-01-01 Nicola Gennaioli, Yueran Ma, Andrei Shleifer
Using micro data from Duke University quarterly survey of Chief Financial Officers, we show that corporate investment plans as well as actual investment are well explained by CFOs’ expectations of earnings growth. The information in expectations data is not subsumed by traditional variables, such as Tobin’s Q or discount rates. We also show that errors in CFO expectations of earnings growth are predictable