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Journal Article
India’s Atypical Structural Transformation
Dollar-Denominated Public Debt in Asia and Latin America
Some countries have high levels of dollar-denominated public debt, which could create a risk for them if U.S. interest rates increase.
Working Paper
Endogenous Borrowing Constraints and Stagnation in Latin America
The Latin American debt crisis of the 1980's had a major and long lasting effect on per-capita consumption: its level in 2005 was not that different from that in 1980. This paper studies the long stagnation in per-capita consumption that followed the crisis, and its relationship with recessions and sovereign risk, using a small open economy real business cycle model with complete markets, endogenous borrowing limits (limited commitment), endogenous capital accumulation, and domestic productivity and international interest rate shocks. I find that the model does an excellent job at explaining ...
Working Paper
Wage Setting Under Targeted Search
When setting initial compensation, some firms set a fixed, non-negotiable wage while others bargain. In this paper we propose a parsimonious search and matching model with two-sided heterogeneity, where the choice of wage-setting protocol, wages, search intensity and degree of randomness in matching are endogenous. We find that posting and bargaining coexist as wage-setting protocols if there is sufficient heterogeneity in match quality, search costs or market tightness and that labor market tightness and relative costs of search play a key role in the optimal choice of the wage-setting ...
Marshall Plan May Not Have Been Key to Europe’s Reconstruction
By the end of World War II, the European economy was in ruins, but the U.S.-led Marshall Plan may not have helped as much as previously thought.
The COVID-19 Recession in Historical Perspective
How severe is the COVID-19 recession across the globe? An analysis compares GDP growth forecasts for 2020 with historical growth rates for 155 countries.
Journal Article
Measuring Underground Economy Can Be Done, but It Is Difficult
There are at least two main ways to measure "the informal sector" of an economy, both of which entail difficulties. The effort is needed, however, because the underground economy accounts for about 13 percent of GDP in developed countries and almost three times that in developing countries.
Journal Article
First-Time Homebuyers Appear to Be Younger, Less Creditworthy in Eighth District
First-time homebuyers are essential to the dynamics of the housing market by allowing current homeowners to trade up. The number of first-time homebuyers decreased between 2000 and 2011, and then started slowly increasing again. There are many possible reasons why this happened, such as rising rent and home prices, rising student debt and tightening credit standards.
Journal Article
The Direction of Capital Flows
Little is known about the comparative quantitative importance of international versus domestic market imperfections on international capital flows.
Working Paper
Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America
Since 1950, the economies of East Asia grew rapidly but received little international capital, while Latin America received considerable international capital even as their economies stagnated. The literature typically explains the failure of capital to flow to high growth regions as resulting from international capital market imperfections. This paper proposes a broader thesis that country-specific distortions, such as domestic labor and capital market distortions, also impact capital flows. We develop a DSGE model of Asia, Latin America, and the Rest of the World that features an ...