This paper describes a quantitative model developed to understand the key determinats of house prices boom-and-bust cycles. The key driving forces behind the boom are residential investment, immigration, current account deficits, relaxation of downpayment constraints, and the elimination of land...

This paper investigates whether the secular process of Structural Change - i.e. the broad shift away from manufacturing and towards services during the post war period - can simultaneously account for the Great Moderation and provide a mechanism for its unraveling. Based on detailed US sectoral...

value exists and displays more severely in smaller samples.

This paper sets up and computes a stochastic neoclassical growth model where agents face uninsurable idiosyncratic labor income risk and heterogenous discount factors. Households value government purchases which are financed by income taxes. The government cannot commit to future streams of...

much.

of the noise distribution, utility function and reservation utility.

There are two stark views of the forces driving aggregate real exchange rates in the short-run. One view is that all of the variance is accounted for by non-traded items in the CPI basket (the classical dichotomy view), the other, due to Engel (1999), claims the opposite, with all of the...

Instead, I present and test a model where bilateral trade liberalization induces the most productive firms (exporters) to adopt skill-biased new technologies. I test the model in the context of a regional free trade agreement, MERCOSUR. I find that the increase in the relative demand of skilled...

positions that require small reallocations. In such circumstances, welfare can increase if the government steps in, purchases private assets on its own account, and resells them when the economy recovers.

We document cross-country differences in informal activity, government policies and institutions using a data set covering 127 countries. Five key facts emerge from this data set. Better institutions are associated with lower inflation, higher income tax rates and less informal activity. Related...