With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and...

With US trade and current account deficits approaching 6% of GDP, some have argued that the country is "on the comfortable path to ruin" and that the required "adjustment'' may be painful. We suggest instead that things are fine: although national saving is low, the ratios of household and...

During the 1990s, asset prices increased significantly in North America and Western Europe and in particular in the United States. This surge in asset prices coincided with the baby boom generation entering its peak earnings and savings years. We use an OLG model with production to ask whether...

The question we ask is: within the set of a three-period-lived OLG economies with a stochastic endowment process, a stochastic dividend process, and sequentially complete markets, under what set of conditions may a set of government transfers dynamically Pareto dominate the laissez faire...

We document that at business cycle frequency, nominal variables, such as aggregate price levels and nominal interest rates, are more correlated across countries than real output. Since national central banks control the domestic money supply and their objective has been to keep the nominal...

One of the most well-known puzzles in international economics is the Lucas paradox: Why doesn't capital flow from rich to poor countries? Given the low capital-output ratios in developing countries, the difference in unconditional expected returns from investing there rather than in developed...

sector and the value of its physical capital.

that central banks incur for implementing Taylor rule type policies.