We develop an unobserved component model in which the short-term interest rate is composed of a stochastic trend and a stationary cycle. Using the Nelson-Siegel model of the yield curve as inspiration, we estimate an extremely parsimonious state-space model of interest rates across time and...

Standard models of intertemporal utility maximization under uncertainty assume that agents discount future utility flows at a constant compounded rate—exponential discounting. Euler equations estimated over different time horizons should have equal discount rates. They do not. Rising term...

This paper uses information contained in the cross-country yield curves to test the asset-pricing approach to exchange rate determination, which models the nominal exchange rate as the discounted present value of its expected future fundamentals. Research on the term structure of interest rates...

The nominal exchange rate is both a macroeconomic variable equilibrating international markets and a financial asset that embodies expectations and prices risks associated with cross border currency holdings. Recognizing this, we adopt a joint macro-finance strategy to model the exchange rate....

In this paper, we examine the determinants of decision-making power by children and young adolescents. Moving beyond previous economic models that treat children as goods consumed by adults rather than agents, we develop a noncooperative model of parental control of child behavior and child...

This article reports on a study of whether young adolescents make decisions autonomously, share decisions with their parents, or have decisions made for them by parents. Using a sample of 2,620 12- and 13-year-olds from the National Longitudinal Survey of Youth – Child Study we examine how...

This paper develops an informational model of litigation in which court decisions are a function of legal representation. In this model, resource constraints determine how much parties expend on legal representation. The allocation of resources across parties influences court decisions in two...

Standard estimates of the NAIRU or natural rate of unemployment are subject to considerable uncertainty. We show in this paper that using multiple indicators to extract an estimated NAIRU cuts in half uncertainty as measured by variance. The inclusion of an Okun’s Law relation is particularly...