We then consider the group of peers (or friends) as an object of choice. We characterize the peer group's optimal composition for each individual in the population. We show that, for each individual, there is a large equivalence class of optimal groups, potentially with maximal variance of...

Time inconsistency provides a motivation for linear Ramsey taxation in a Mirrleesian economy. Moreover, such a motivation overturns some classic results from the Ramsey taxation literature; specifically, indirect taxation may neither be useless (i.e., redundant) nor uniform.

Consumer debt and bankruptcy are central issues today because of their explosive trends over the last 20 years in the U.S. economy. However, there is no convincing explanation for these facts. A drop in information costs, a potential cause, has not been evaluated mainly because there is no...

We present a new automated, objective and intuitive scoring method to measure the content of central bank communication about future policy rate moves. We apply the methodology to statements released by the Federal Open Market Commitee (FOMC) after monetary policy meetings. Using high-frequency...

This paper develops a competitive equilibrium model of CEO compensation and industry dynamics. CEOs make product pricing and product improvement decisions subject to shareholders' compensation choices and idiosyncratic shocks to product quality. The choice of high-powered incentives optimally...

We explore the implications of current account adjustment for monetary policy within a simple two-country DSGE model. Our framework nests Obstfeld and Rogoff’s (2005) static model of exchange rate responsiveness to current account reversals. It extends this approach by endogenizing the dynamic...

estimate the sharing rule using 2000 Census data and implement a semi-parametric test of the over-identifying restrictions.

higher job satisfaction than the employed, even after controlling for income and hours worked. However, there is a large amount of heterogeneity in this effect: while “independent types” experience a large increase in job satisfaction from being self-employed, “hierarchical types” even...

In this paper we compare in a consistent way micro and macro labor supply elasticities. The individual elasticity is obtained from the Panel Study of Income Dynamics (PSID). The aggregate, time-series, elasticity is estimated from the exact aggregation of the individual units in the PSID, each...

rates that are consistent with U.S data.