This paper develops and estimates an overlapping generations general equilibrium model of labor earnings, skill formation and physical capital accumulation with heterogeneous human capital. The model analyzes both schooling choices and post-school on-the-job investment in skills in a framework...

We show that policy uncertainty about how the rising public debt will be stabilized accounts for the lack of deflation in the US economy at the zero lower bound. We first estimate a Markov-switching VAR to highlight that a zero-lower-bound regime captures most of the comovements during the Great...

We reinterpret post World War II US economic history using an estimated microfounded model that allows for changes in the monetary/fiscal policy mix. We find that the fiscal authority was the leading authority in the '60s and the '70s. The appointment of Volcker marked a change in the conduct of...

We develop a new class of general equilibrium models with partially unfunded debt to propose a fiscal theory of trend inflation. In response to business cycle shocks, the monetary authority controls inflation, and the fiscal authority stabilizes debt. However, the central bank accommodates...

This paper derives simply computed closed-form expressions for the Average Treatment Effect (ATE), the effect of Treatment on the Treated (TT), Local Average Treatment Effect (LATE) and Marginal Treatment Effect (MTE) in a latent variable framework for both normal and non-normal models. The...

This paper formulates and estimates a rigorously-justified linear probability model of binary choices over alternatives characterized by unobserved attributes. The model is applied to estimate preferences of congressmen as expressed in their votes on bills. The effective dimension of the...