and productivity shocks similar to the assumptions in Chatterjee, Corbae, Nakajima, and Rios-Rull (2007, Econometrica).

the main business cycle regularities of emerging economies.

The model described here provides a central role for policies and institutions that compress the wage structure. For example, unions and progressive income taxes reduce (after-tax) wages at the higher end of the wage distribution while artificially boosting them at the lower end. As a result,...

The majority of OECD countries has experienced a reduction in macroeconomic volatility during the last two decades. This period is also characterized by a gradual liberalization of the capital accounts in these countries. We first show that, on average, countries/periods with more open capital...