Do mandatory spending programs such as Medicare improve efficiency? We analyze a model with two parties allocating a fixed budget to a public good and private transfers each period over […]
Archives: Research Highlights
The Distribution of Wealth and the Marginal Propensity to Consume
In a model calibrated to match micro- and macroeconomic evidence on household income dynamics, we show that a modest degree of heterogeneity in household preferences or beliefs is sufficient to […]
Expected Inflation and Other Determinants of Treasury Yields
Shocks to nominal bond yields consist of news about expected future inflation, expected future real short rates, and expected excess returns—all over the bond’s life. I estimate the magnitude of […]
A Mechanism for Eliciting Second-Order Beliefs and the Inclination to Choose
This paper describes a direct revelation mechanism for eliciting decision makers’ introspective beliefs on sets of subjective prior or posterior probabilities. The proposed scheme constitutes a revealed-preference procedure for measuring […]
Belief Distortions and Macroeconomic Fluctuations
This paper combines a data-rich environment with a machine learning algorithm to provide new estimates of time-varying systematic expectational errors (“belief distortions”) embedded in survey responses. We find sizable distortions […]
Misclassification Errors In Labor Force Statuses and the Early Identification of Economic Recessions
Accurate identification of economic recessions in a timely fashion is a major macroeconomic challenge. The so-called Sahm recession indicator (Sahm, 2019), one of the most reliable early detectors of the […]
Missing Events in Event Studies: Identifying the Effects of Partially Measured News Surprises
Macroeconomic news announcements are elaborate and multi-dimensional. We consider a framework in which jumps in asset prices around announcements reflect both the response to observed surprises in headline numbers and […]
Genetic Endowments and Wealth Inequality
We show that genetic endowments linked to educational attainment strongly and robustly predict wealth at retirement. The estimated relationship is not fully explained by flexibly controlling for education and labor […]
Bargaining and News
We study a bargaining model in which a buyer makes frequent offers to a privately informed seller, while gradually learning about the seller’s type from “news.” We show that the […]
Macroprudential Regulation Versus Mopping Up After the Crash
How should macroprudential policy be designed when policymakers also have access to liquidity provision tools to manage crises? We show in a tractable model of systemic banking risk that there […]