We analyze labor market models where the law of one price does not hold-that is, models with equilibrium wage dispersion. We begin by assuming workers are ex ante heterogeneous, and highlight a flaw with this approach: if search is costly, the market shuts down. We then assume workers are...

Search models with posting and match-specific heterogeneity generate wage dispersion. Given K values for the match-specific variable, it is known that there are K reservation wages that could be posted, but generically never more than two actually are posted in equilibrium. What is unknown is...

Using Chilean data, we document that for resource-rich small open economies the effects of terms of trade shocks on the wage gap (between skilled and unskilled workers) depend on factor intensities in the non-tradable sector, following the model in Galiani, Heymann, and Magud (2010). For a...

This 2004 Article IV Consultation highlights that following a rather tepid recovery, the United States economy gathered strength in 2003. Supported by continued robust productivity growth, real GDP growth began to exceed the growth rate of potential output around midyear. The recovery broadened...

This Selected Issues paper presents updated IMF staff estimates of potential output growth for the United States, using data through 2001 that incorporates the full cyclical upswing of the 1990s and the subsequent mild recession, as well as taking into account the revisions to the national...

The 2005 Article IV Consultation for the United States reports that robust productivity growth and high corporate profits have contributed to a strong rebound in business investment and some acceleration in employment. The financial sector appears well positioned to provide continued support to...

This Selected Issues paper analyzes the United State’s (U.S.) household savings role in supporting the U.S. recovery; and focuses on the market for single-family housing, and the importance for household balance sheets. It discusses the underfunding of corporate pension plans, macroeconomic,...

Despite repeated shocks, the United States economy has provided valuable support for global growth. Executive Directors commended this development, and stressed the need to tighten fiscal and monetary policies. They welcomed the assessment of the fiscal transparency Reports on Observance of...