The recent financial crisis and the associated decline in economic activity have raised some important questions about economic activity and its links to the financial sector. This paper introduces an index of financial stress - an index that was used in real time by the staff of the Federal...

model and estimate by maximum likelihood the parameters governing the market price of risk. We show that agents' beliefs about the joint evolution of macroeconomic variables has changed in quantitatively important and economically meaningful ways. Moreover, macroeconomic factors turn out to be...

In recent years, the learnability of rational expectations equilibria (REE) and determinacy of economic structures have rightfully joined the usual performance criteria among the sought-after goals of policy design. Some contributions to the literature, including Bullard and Mitra (2001) and...

This paper investigates how political incentives affect the allocation of public goods using data from Brazil's Federal Legislature, a setting in which federal politicians representing multi-member districts can issue budgetary amendments for public works in their respective districts. We...