We present a new propagation mechanism for news shocks in dynamic general equilibrium models. The existing literature has considered representative agents models, in which news shock impact the economy through intertemporal substitution mechanisms. We consider different setups with heterogenous...

oil price shocks.

In this paper, I develop a quantitative, general equilibrium theory of product quality and international trade. In the model, producers make choices regarding the quality/technology of their intermediate inputs given the set of endowments they have access to. This choice affects the producers...

We examine the driving forces of G-7 business cycles. We decompose national business cycles into common and nation-specific components using a dynamic factor model. We also do this for driving variables found in business cycle models: productivity; measures of fiscal and monetary policy; the...

Recent theoretical work predicts that an important margin of adjustment to deregulation or trade reforms is the reallocation of output within firms through changes in their product mix. Empirical work has accordingly shifted its focus towards multi-product firms and their product mix decisions....

We analyze the process of technological innovation from the perspective of developing countries. Specifically, we explore how developmental and regulatory impediments to the process of resource reallocation and firm renewal limit the ability of developing countries to adopt new technologies....

Simulations of the estimated model characterize managers' effort choices in response to increased product market competition. In the agency model, heightened competitive pressures that cause managerial effort to increase by 23 percent for the lowest productivity firms, which are most likely to...

While intermediate inputs account for more than half of a final product's value, intersectoral linkages have been ignored as a source of skill bias. Previous empirical studies have investigated skill demand at the worker-, firm-, and sector-level. This paper integrates intersectoral linkages and...

I analyze how lack of commitment affects the maturity structure of sovereign debt. Governments balance benefits of default induced redistribution and costs due to income losses in the wake of a default. Their choice of short- versus long-term debt affects default and rollover decisions by...

A striking fact about prices is the prevalence of "sales": large temporary price cuts followed by prices returning exactly to their former levels. This paper builds a macroeconomic model with a rationale for sales based on firms facing consumers with different price sensitivities. Even if firms...