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Working Paper
Interpreting life-cycle inequality patterns as an efficient allocation: mission impossible?
Data on consumption, earnings, wages and hours dispersion over the life cycle is commonly viewed as incompatible with a Pareto efficient allocation. We show that a model with preference and wage shocks and full insurance produces the rise in consumption, wages and hours dispersion over the life cycle found in U.S. data. The efficient allocation model requires an increasing preference shifter dispersion profile to account for an increasing consumption dispersion profile. We examine U.S. data and find support for the view that the dispersion in preference shifters increases with age.
Journal Article
Oil Prices: Is Supply or Demand Behind the Slump?
A standard decomposition suggests the role of oil supply (understood as the current physical availability of crude) has been small.
Journal Article
Quantitative Macro Versus Sufficient Statistic Approach: A Laffer Curve Dilemma?
This article highlights two approaches to tax policy for the top 1 percent of earners. On the one hand are dynamic general equilibrium models requiring complicated calibration and simulation algorithms and strong structural assumptions. On the other hand is the sufficient statistic approach, which attempts to parsimoniously reach the trinity of empirical, theoretical, and policy relevance. The author illustrates ongoing work highlighting explicit connections between these two approaches.
Journal Article
Recent ECB Policy and Inflation Expectations
Market participants may not expect recent ECB policy to boost inflation.
Working Paper
Understanding permanent black-white earnings inequality
Average annual earnings of black US households have remained at around half the average earnings of white households for more than 30 years. Why are the earnings of black households so low compared to those of white households? Why can blackwhite earnings inequality of such magnitude be permanent? This paper provides a quantitative answer based on neighborhood effects. The economic and demographic characteristics of neighborhoods and the distribution of earnings are determined endogenously from the location and investment decisions of altruistic parents. Permanent racial inequality arises ...
Journal Article
Oil Prices and Inflation Expectations: Is There a Link?
Oil prices and inflation expectations sometimes move in tandem. A close look at three types of shocks to oil prices suggests that not all shocks relate to inflation expectations in the same manner.
Journal Article
Exploring the link between drug use and job status in the U.S.