We describe new evidence that technological change is biased toward producing durables goods. Existing evidence in favor of the importance of change to growth and business cycles is based on the price deflators for investment and consumption goods. Our evidence is based on additional data,...

Every month thousands of people become employed or unemployed. In the same month thousands of people decide to enter or exit the labor force. Although most of the literature focuses primarily on job flows, several recent empirical and theoretical studies suggest that, in order to completely...

This paper studies the long-run effects of anticipated inflation on output and welfare within a search-theoretic framework. We allow money-holders to choose the intensities with which they search for trading partners, so the frequency of trades is endogenous. We consider the standard pricing...

Most economic activity occurs in cities. This creates a tension between local increasing returns, implied by the existence of cities, and aggregate constant returns, implied by balanced growth. To address this tension, we develop a theory of economic growth in an urban environment. We show how...

The purpose of this paper is to develop a framework that allows one to distinguish between the extent to which differences in firm productivity are intrinsic and the proposition that higher paying firms employ more able workers. For this purpose, we adapt the equilibrium stochastic model of firm...

Housing economists have questioned whether current US tax and government mortgage policy actually fosters homeownership. In this paper we examine this question interms of a dynamic general equilibrium model with heterogeneous agents. The model allows households to make saving and shelter...

Mankiw and Reis (2002) have proposed sticky information as an alternative to Calvo sticky prices in order to model the conventional view that i) inflation reacts with delay and gradually to a monetary policy shock, ii) announced and credible disinflations are contractionary and iii) inflation...

This paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation. Sellers can change price only by incurring a real menu cost.' We calibrate this cost and the variance and autocorrelation of the...

This paper presents a theoretical framework in which either long-term or short-term labor contracts arise endogenously. The fundamental trade-off is between firm specific and general human capital. While firm-specific human capital is more productive than general human capital, it cannot be...

Job search is an unpleasant activity with immediate costs and delayed benefits. The tension between long-run goals and short-run impulses may lead unemployed workers to postpone repeatedly tasks necessary to find a job. In standard economic models, agents are assumed to be time-consistent, so...