We introduce home production into the neoclassical growth model and examine its consequences for development economics. In particular, we study the extent to which one can account for international income differences with differences in policies that distort capital accumulation. In models with...

Once the zero bound on nominal interest rates is taken into account, Taylor-type interest rate feedback rules give rise to unintended self-fulfilling decelerating inflation paths and aggregate fluctuations driven by arbitrary revisions in expectations. These undesirable equilibria exhibit the...

Recent empirical work indicates that job creation and destruction rates are large, implying significant amounts of job reallocation across firms. This paper builds a general equilibrium model of this reallocation process, calibrates it using data on firm-level dynamics, and evaluates the...

We analyze five education finance systems: local, state, foundation, power equalizing with recapture (PER), and power equalizing without recapture (PEN). In a calibrated model, we find that finance systems have large effects on educational resources and equity. The trade-off between equity and...

This paper constructs a two-period, two-sector model in which there are permanent sectoral shocks. It analyzes the equilibrium path of individual labor supply, sectoral em ployment, and duration of unemployment in response to these shocks. E quilibrium allocations are shown to be easy to...

This paper examines hours worked in continental Europe and the United States from 1956 to 2003. The empirical work establishes two results. First, hours worked in Europe decline by almost 45 percent compared to the United States over this period. Second, this decline is almost entirely accounted...

Suppose that n buyers each want one unit and m sellers each have one or more units of a good. Sellers post prices, and then buyers choose sellers. In symmetric equilibrium, similar sellers all post one price, and buyers randomize. Hence, more or fewer buyers may arrive than a seller can...

This paper studies models of credit with limited commitment and, therefore, endogenous debt limits. There are multiple stationary equilibria plus nonstationary equilibria in which credit conditions change simply because of beliefs. There can be equilibria in which debt limits display...