This paper studies a two country model with economies disaggregated into traded and non-traded sectors and in which investment goods as in practice are produced by combining inputsfrom all sectors. The model also accounts for nontraded distribution services employed in retail-ing traded goods to...

There are substantial differences in output per worker across states that persist over time. This studydemonstrates that differences in state taxation of capital income, capital ownership, and consumption canexplain why differences in labor productivity can persist. First, state tax policies...

The tug-o-war for supremacy between inflation targeting and monetary tar-geting is a classic yet timely topic in monetary economics. In this paper, werevisit this question within the context of a pure-exchange overlapping genera-tions model of money where spatial separation and random relocation...

Across nine transition economies, it is the young, educated, English-speaking workers with the best access to local telecommunications infrastructures that work with computers. These workers earn about 25% more than do workers of comparable observable skills who do not use computers. Controlling...

In this paper, we study a decentralized monetary economy witha speci…ed set of markets, rules of trade, an equilibrium concept, and a restricted setof policies and derive a set of equilibrium (monetary) allocations generated by thesepolicies. Next we set up a simpler constrained planning...

A unique data set on home use of computers and the Internet is used to investigate the tradeoffsbetween physically commuting to a work site and telecommuting from home via computers. Thestudy further investigates whether individuals who work from home receive greatercompensation relative to...

Faced with real and nominal shocks, what should a benevolent central bankdo, …x the money growth rate or target the inflation rate? In this paper, wemake a …rst attempt at studying the optimal choice of monetary policy in-struments in a micro-founded model of money. Speci…cally, we produce...

In this paper, we explore the connection between optimal monetary policy and heterogeneityamong agents. We study a standard monetary economy with two types of agents inwhich the stationary distribution of money holdings is non-degenerate. Sans type-specific fiscalpolicy, we show that the...

Across nine transition economies, it is the young, educated, English-speaking workers with thebest access to local telecommunications infrastructures that work with computers. Theseworkers earn about 25% more than do workers of comparable observable skills who do not usecomputers. Controlling...

This paper compares the welfare under two standard alternative exchange rate regimes, fixed andflexible, in a stochastic dynamic general equilibrium two-country setting. Conventional wisdomholds that countries often prefer low exchange-rate variability to stabilize trade. This may explainthe...