The representative-agent framework has endowed macroeconomists with powerful microeconomic tools. Unfortunately, it has also blurred the distinction between statements that are valid at the individual level and those that apply to the aggregate. In this paper, the author argues that probability...

This paper studies quarterly employment flows of approximately 10,000 U.S. manufacturing establishments. The authors use establishments' hours-week to construct measures of the deviation between desired and actual employment and use these as the establishments' main state variables. The main...

Recent contributions emphasize that the presence of exchange-rate target zones has important effects on the within-band behavior of exchange rates when agents are forward-looking. The authors find that the implications of available models are inconsistent with European exchange-rate data, and...

The authors investigate industry response to cyclical variations in demand. Production units that embody the newest process and product innovations are continuously being created and outdated units are being destroyed. Although outdated units are the most likely to turn unprofitable and be...

This paper argues that precautionary savings due to uninsurable earnings uncertainty are likely to be an important source of aggregate wealth accumulation. The stylized model presented in this paper can easily generate levels of wealth above 60 percent of the observed net wealth in the United...