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Working Paper
An Information-based Theory of Monopsony Power
Cheremukhin, Anton; Restrepo-Echavarria, Paulina (2026-09-29)
We develop an information-based theory of monopsony power that unifies search frictions and job differentiation by endogenizing worker search and firm screening through rational inattention. The model yields a closed-form wage equation that decomposes the sources of monopsony power and nests directed and random search as limiting cases. The framework reconciles strong assortative matching with flat wage-productivity profiles, large wage markdowns with small firm wage effects, and high estimated labor supply elasticities with substantial monopsony power. Estimating the model on a matched ...
Working Papers , Paper 2025-026

Working Paper
The Impact of Bretton Woods International Capital Controls on the Global Economy and the Value of Geopolitical Stability: A General Equilibrium Analysis
Ohanian, Lee E.; Restrepo-Echavarria, Paulina; Van Patten, Diana; Wright, Mark L. J. (2026-09-29)
This paper quantifies the positive and normative effects of Bretton Woods capital controls on global economic activity. It applies a three-region DSGE model of the U.S., Western Europe, and the Rest of the World (ROW) that measures capital controls using observed regional consumption growth differences. We find sizable controls during Bretton Woods that prevented ROW capital from flowing to the U.S., and which reduced U.S. welfare and raised ROW welfare. By preventing capital flight in developing economies, we find that Bretton Woods controls promoted the U.S. foreign policy objective of ...
Working Papers , Paper 2020-042

Working Paper
The Dual Beveridge Curve
Cheremukhin, Anton; Restrepo-Echavarria, Paulina (2026-09-29)
The U.S. Beveridge curve’s recent outward shift has puzzled economists. We trace this puzzle to a shifting composition of job openings, proposing a dual-vacancy framework that splits vacancies into two types: those targeting the already-employed (poaching vacancies) and those aimed at hiring from unemployment (non-poaching vacancies). Using U.S. labor market data from 1978-2026, our reduced form Bayesian estimation reveals a fundamental disconnect: while poaching vacancies drive most vacancy fluctuations, the hiring of employed workers is almost completely insensitive to them. When we ...
Working Papers , Paper 2022-021

Working Paper
Fleeting Forbearance in a World of Persistent Financial Distress
Mustre-del-Río, José; Sánchez, Juan M.; Athreya, Kartik B. (2026-09-28)
CORRECT ORDER OF AUTHORS: Mustre-del-Río, Sánchez, Athreya. Relative to the persistent delinquency typically observed in consumer credit, mortgage forbearance during the COVID-19 pandemic was surprisingly short-lived. To understand why, we develop a rich structural model and estimate it on credit panel microdata. Next, using the model and survey data, we identify key roles for both selection into mortgages by relatively patient households and the failure of anticipated income losses to materialize. Even taking selection in account, had losses occurred, forbearance participation would have ...
Working Papers , Paper 2026-019

Working Paper
An Analysis of the Literature on Monetary Policy Shocks
Neely, Christopher J. (2026-09-27)
Monetary policy has been the primary tool of macroeconomic management since the 1970s. As a result, the effects of monetary shocks became an important area of policy research. In the 1980s, event studies showed that U.S. monetary-aggregate announcements strongly affected asset prices, although no single model readily explained the responses. Greater central-bank transparency in the 1980s and 1990s increased interest in measuring monetary policy's effects on financial and macroeconomic variables. In the 1990s, researchers predominantly used vector autoregressions (VARs) to estimate the effects ...
Working Papers , Paper 2026-023

Working Paper
On the Complementarity of K-12 Personal Finance and Economic Education: Evidence from Online Modules
García, Manu; Mendez-Carbajo, Diego (2026-09-23)
We compile data from 2.4 million economics and personal finance module assignments completed by 513,000 K-12 students on an educational online platform. We exploit variation in the order in which these students complete the modules–economics or personal finance first– to estimate directional spillovers. The spillover runs one way. Controlling for school demographics, students who take economics first score 3.42 points higher on personal finance post-tests; taking personal finance first raises economics post-tests by 0.15 points on the same specification. A placebo using exposure that ...
Working Papers , Paper 2026-022

Working Paper
Shipping to America
Bai, Xiwen; Fernández-Villaverde, Jesús; Li, Yiliang; Marto, Ricardo; Zanetti, Francesco (2026-09-21)
We study the macroeconomic and trade-policy implications of disruptions to U.S.-bound shipping routes. Standard models treat them as iceberg-cost shocks, conflating the shock with the response to it. Using satellite vessel-tracking data, we construct route-level measures of potential and effective capacity for all U.S.-bound container ships from 2016 to 2025. Utilization losses in recent disruptions ran 20 to 40 percentage points, and began months before port congestion became visible. We embed these measures in a general equilibrium model in which firms reallocate a common fleet without ...
Working Papers , Paper 2026-021

Working Paper
Why Do Americans No Longer Work So Much More Than Non-Americans?
Birinci, Serdar; Karabarbounis, Loukas; See, Kurt (2026-09-21)
In the 1990s, Americans used to work much more than non-Americans. Nowadays, about half of the gap in hours worked has disappeared. To evaluate the convergence of working hours, we develop a tractable model of labor supply enriched with multiple sources of heterogeneity across individuals, an extensive margin of participation, multi-member households, and an elaborate system of taxes and benefits upon non-employment. Using detailed measurements from micro-level and aggregate datasets, we identify model parameters and sources of heterogeneity across individuals for various countries. We run a ...
Working Papers , Paper 2026-002

Working Paper
Monetary and Fiscal Policy during the COVID-19 Pandemic
Andolfatto, David; Martin, Fernando M. (2026-09-17)
We study U.S. monetary and fiscal policy during the COVID-19 pandemic using a small-scale dynamic general equilibrium model calibrated to 2020–2024. The model is used to evaluate observed and counterfactual policies, emphasizing their distributional consequences. Without fiscal support, the pandemic would have imposed large welfare losses on adversely affected households and substantially increased welfare inequality. Fiscal transfers provided valuable social insurance, but exceeded the amount necessary to relax borrowing constraints. Optimal monetary policy calls for earlier tightening but ...
Working Papers , Paper 2025-004

Working Paper
Fiscal Dominance and Central Bank Independence
Martin, Fernando M. (2026-09-17)
I study policy when fiscal and monetary authorities disagree, cannot commit to future actions and move simultaneously. This approach shifts attention from active and passive authorities or policies to active and passive instruments, and allows formal definitions of fiscal dominance and central bank independence. In the benchmark case, an independent central bank sets the short-term rate and the fiscal authority sets taxes and spending: fiscal dominance cannot arise, but time-consistency problems remain. Fiscal dominance can arise when the fiscal authority actively sets debt growth instead. ...
Working Papers , Paper 2020-040

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