We propose a theory of monetary policy and macroprudential interventions in financial markets. We focus on economies with nominal rigidities in goods and labor markets and subject to constraints on monetary policy, such as the zero lower bound or fixed exchange rates. We identify an aggregate...

This paper uses Roy's model of sorting behavior to study welfare implication of current health care data production infrastructure that relies on solicitation of research subjects. We show that due to severe adverse-selection issues, directionality of bias cannot be established and welfare may...

The paper first attempts to demonstrate the fundamental importance of the social context. The related evidence is drawn from recent theoretical and empirical advances in the study of subjective well-being. Treating people's self-assessments of the quality of their lives as valid measures of...

Many scholars have argued that once "basic needs" have been met, higher income is no longer associated with higher in subjective well-being. We assess the validity of this claim in comparisons of both rich and poor countries, and also of rich and poor people within a country. Analyzing multiple...

If rational individuals pay the full costs of their decisions about food intake and exercise, economists, policy makers, and public health officials should treat the obesity epidemic as a matter of indifference. In this paper, we show that, as long as insurance premiums are not risk rated for...

In this paper, we generalize the notion of Pareto-efficiency to make it applicable to environments with endogenous populations. Two efficiency concepts are proposed, P-efficiency and A-efficiency. The two concepts differ in how they treat people who are not born. We show how these concepts...

Consumers often benefit from increased competition in differentiated product settings. In this paper we consider consumer benefits from increased competition in a differentiated product setting: the spread of non-traditional retail outlets. In this paper we estimate consumer benefits from...

What are the welfare effects of the information contained in macroeconomic statistics, central-bank communications, or news in the media? We address this question in a business-cycle framework that nests the neoclassical core of modern DSGE models. Earlier lessons that were based on "beauty...

We show that, without strong auxiliary assumptions, it is impossible to rank groups by average happiness using survey data with a few potential responses. The categories represent intervals along some continuous distribution. The implied CDFs of these distributions will (almost) always cross...

We survey theoretical developments in the literature on the limits of arbitrage. This literature investigates how costs faced by arbitrageurs can prevent them from eliminating mispricings and providing liquidity to other investors. Research in this area is currently evolving into a broader...