Search Results
Working Paper
Artificial Intelligence and Technological Unemployment
How large are the effects of artificial intelligence (AI) on labor productivity and unemployment? We develop a labor-search model of technological unemployment where AI learns from workers, raises productivity, and displaces them if renegotiation fails. The model admits three steady states: no AI; some AI with limited capability, more job creation but higher unemployment; unbounded AI with endogenous growth and employment gains. Calibrated to U.S. data, the model implies a threefold productivity gain but a 23% employment loss, half within five years. Plausible parameters give rise to global ...
Working Paper
Money, output, and income velocity
Working Paper
Nominal and real disturbances and money demand in the Chinese hyperinflation
This paper reexamines the dynamics of hyperinflation by allowing variability in the relative price of capital goods in units of consumption goods that reflects interactions between the real and monetary sectors. The theory generates empirically testable implications that suggest expanding the standard Caganian money demand function to include both anticipated inflation and relative price effects in a nonlinear fashion. Employing data from the post-World War II Chinese hyperinflationary episode, the empirical findings suggest that conventional econometric investigations of money demand during ...
Working Paper
Rural-Urban Migration, Structural Transformation, and Housing Markets in China
This paper explores the contribution of the structural transformation and urbanization process in the housing market in China. City migration flows combined with an inelastic land supply, due to entry restrictions, has raised house prices. This issue is examined using a multi-sector dynamic general-equilibrium model with migration and housing market. Our quantitative findings suggest that this process accounts for about 80 percent of urban housing prices. This mechanism remains valid in an extension calibrated to the two largest cities where housing booms have been particularly noticeable. ...
Working Paper
Financial matchmakers in credit markets with heterogeneous borrowers
What happens when liquidity increases in credit markets and more funds are channeled from borrowers to lenders? We examine this question in a general equilibrium model where financial matchmakers help borrowers (firms) and lenders (households) search out and negotiate profitable matches and where the composition of heterogeneous borrowers adjusts to satisfy equilibrium entry conditions. We find that enhanced liquidity causes entry by all borrowers and tends to benefit low-quality borrowers disproportionately. However, liquid credit markets may or may not be associated with higher output and ...
Journal Article
High inflation: causes and consequences
Using evidence from seven hyperinflationary episodes in four Latin American countries in the second half of the 1980s, John Rogers and Ping Wang examine the causes and consequences of high inflation. The article emphasizes four issues: the welfare costs of inflation and real costs of stabilization, the common features of the chronically high inflations experienced in Latin American countries, the main causes of high inflation, and the widely different outcomes of several stabilization programs. ; Rogers and Wang find that the welfare costs of even moderate periods of inflation may not be ...
Working Paper
Endogenous market structures and financial development
Existing theories that emphasize the significance of financial intermediation for economic development have not addressed two important empirical facts: (i) the relationship between financial and real activities depends crucially on the stage of development, and (ii) financial and industrial market structures vary widely across otherwise similar countries. To explain these observations, we develop a dynamic general equilibrium model allowing for endogenous market structures in which financial deepening spurs real activity through intermediate product broadening. We show the possibility of ...
Working Paper
Inflation, trade frictions, and productive activity in a multiple-matching model of money
This paper investigates the relationship between money growth, inflation, and productive activity in a general equilibrium model of search. The use of a multiple-matching technique, where trade frictions are captured by limited consumption variety, allows us to study price determination in a search-theoretic environment with divisible money and goods. In our basic framework, productive activity and matching in the goods market are endogenized by a time allocation decision of work and shopping effort. We find that in such an environment, a positive feedback between shopping and work effort ...
Working Paper
Costly intermediation and the big push
Many existing theories of financial intermediation have difficulty explaining why financial activity can generate large real effects. This paper argues that the large real effects may reflect a multiplicity of equilibria. The multiple equilibria in this paper are generated by the dynamic interactions between the savings decisions of workers and the monopolistically competitive behavior of banks. We characterize the equilibria by showing the comparative-static responses of key aggregates to changes in the pure rate of time preference, investment uncertainty, and bank costs. We find that the ...