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Bank:Federal Reserve Bank of St. Louis  Content Type:Working Paper 

Working Paper
Trade Risk and Food Security

International trade provides critical access to food, yet many food-importing countries protect agriculture even where productivity is low. We study how the risk of trade disruptions shapes food security, the global distribution of production, and optimal policy. We document that reliance on imported staples is linked to higher food insecurity, particularly in poorer countries. Exploiting the Ukraine–Russia war, we find that districts in Ethiopia more exposed to disrupted imports suffered sharper declines in food security. We develop a multi-sector model of trade with stochastic trade costs ...
Working Papers , Paper 2024-004

Working Paper
The Implications of Labor Market Heterogeneity on Unemployment Insurance Design

We estimate UI eligibility, take-up, and replacement rates at the individual level and document how these rates vary with earnings and wealth prior to job loss, as well as over the duration of unemployment. To evaluate whether our empirical findings are important for shaping UI policy design, we analyze a widely used framework that combines an incomplete markets model with a frictional labor market. We show that when the model is extended to match our findings, the optimal policy becomes substantially more generous relative to the nested model that does not. In addition, the welfare gains ...
Working Papers , Paper 2024-026

Working Paper
Earnings Misperceptions and Household Distress

Households learn whether income changes are temporary or persistent from their own paychecks. This paper develops a quantitative model of financial distress that incorporates this inference and estimates the extent to which households overweight recent outcomes—diagnostic expectations—using survey data on income beliefs. The model explains distress without assuming extreme impatience and aligns with the observed relationship between income and interest rates. Learning and diagnostic expectations account for about half of delinquencies and one-third of bankruptcies. Diagnostic expectations ...
Working Papers , Paper 2025-030

Working Paper
An Empirical Analysis of the Cost of Borrowing

We empirically study firm financing costs using a comprehensive dataset of corporate bonds and bank loans. We construct a measure of the cost of financing, the ExcessDebt Premium, which controls for observable debt characteristics. We document two key findings: first, bank loans are about 97 basis points cheaper than corporate bonds when controlling for observable characteristics. Second, there is significant dispersion in borrowing costs, even within the same firm and quarter. The analysis reveals that this within firm variation persists after accounting for instrument type, maturity, ...
Working Papers , Paper 2024-016

Working Paper
Sluggish news reactions: A combinatorial approach for synchronizing stock jumps

Stock prices often react sluggishly to news, producing gradual and delayed jumps. Econometricians typically treat these sluggish reactions as microstructure effects and settle for a coarse sampling grid to guard against them. We introduce new methods to synchronize mistimed stock returns on a fine sampling grid that allow us to better approximate the true common jumps in the efficient prices of related stocks in an application to Dow 30 data. The synchronized jumps produce better jump covariance estimates and estimates of the realized jump betas with better forecasting power, and superior ...
Working Papers , Paper 2024-006

Working Paper
Trade Risk and Food Security

International trade provides critical access to food, yet many food-importing countries protect agriculture even where productivity is low. We study how the risk of trade disruptions shapes food security, the global distribution of production, and optimal policy. We document that reliance on imported staples is linked to higher food insecurity, particularly in poorer countries. Exploiting the Ukraine–Russia war, we find that districts in Ethiopia more exposed to disrupted imports suffered sharper declines in food security. We develop a multi-sector model of trade with stochastic trade costs ...
Working Papers , Paper 2024-004

Working Paper
The Rapid Adoption of Generative AI

Generative artificial intelligence (AI) is a potentially important new technology, but its impact on the economy depends on the speed and intensity of adoption. This paper reports results from a series of nationally representative U.S. surveys of generative AI use at work and at home. As of late 2024, 45% of the U.S. population age 18-64 uses generative AI. Among employed respondents, 27% used generative AI for work at least once in the previous week: 10% used it every workday, and 17% on some but not all workdays. Relative to each technology’s first mass-market product launch, work ...
Working Papers , Paper 2024-027

Working Paper
Parents, Patience, and Persistence: A Novel Theory of Intergenerational College Attainment

We present a theory of intergenerational persistence in college attainment (a Bachelors degree, BD) guided by two well-documented empirical regularities: (i) patient individuals are more likely to be college graduates and (ii) patience persists across generations because parents choose to transmit it to their children, among other non-cognitive traits. To the best of our knowledge, we are the first to formalize and evaluate these mechanisms in a general equilibrium model. In the model, (i) and (ii) are endogenous outcomes implying college persistence. Standard mechanisms, i.e., credit ...
Working Papers , Paper 2025-003

Working Paper
The Evolution of Regional Beveridge Curves

The slow recovery of the labor market in the aftermath of the Great Recession highlighted mismatch, or the misallocation of workers across space or across industries. We consider the historical evolution of regional mismatch. We construct MSA-level unemployment rates and vacancy data using techniques similar to Barnichon (2010) and a new dataset of online help wanted ads by MSA. We estimate regional Beveridge curves, identifying the slopes by restricting them to be equal across locations with similar labor market characteristics. We find that the 51 U.S. cities in our sample have four ...
Working Papers , Paper 2022-037

Working Paper
Earnings Misperceptions and Household Distress

Households learn whether income changes are temporary or persistent from the history of their own paychecks. This paper develops a quantitative model of household financial distress that incorporates this inference and uses survey data on income expectations to estimate the extent to which households overweight recent outcomes—diagnostic expectations. The model improves on the standard full-information, rational-expectations benchmark in two key dimensions: it explains financial distress without assuming extreme impatience, and it more accurately captures the empirical correlation between ...
Working Papers , Paper 2025-030

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