We measure the gains from a trade cost reduction in a model with dynamic accumulation of factors. We show that the tight link between import intensity and gains from trade that exists in static models breaks down along transition paths in dynamic models. When trade costs are reduced, the need to...

We develop a general equilibrium model with a detailed structure of government expenditures and revenues, calibrate it to the Greek and German economies, and use it to study the link between fiscal discipline and defaults. We show that even if the Greek government had entered the Great Recession...

We study the impact of trade on a country catching up to the industrial leader. We calibrate our dynamic, two-country model to Spain and UK from 1850 to 2000, accounting for the inter-war trade collapse (IWTC) and the subsequent catch up by Spain. In our model, the effects of trade disruptions...

The neoclassical growth model (NGM), which is widely used to study macroeconomic phenomena, has a constant labor share built in. However, several recent studies show that the labor share has been declining since at least the 1980s. This calls into question whether the NGM should still be used as...

Atkinson, Piketty, and Saez [2011] find a post-1979 surge in taxfiler top income shares in “English speaking countries” (surge countries) but not in “continental European countries and Japan” (no-surge countries). We find the puzzle that Comtrade import-to-GDP ratios and...

Applied general equilibrium (AGE) models, which feature multiple countries, multiple industries, and input-output linkages across industries, have been the dominant tool for evaluating the impact of trade reforms since the 1980s. We review how these models are used to perform policy analysis and...

Total Factor Productivity (TFP) growth in Canada between 2002 and 2014 has been only 0.16% per year. Although many developed countries have experienced a productivity slowdown since the beginning of the century, this figure is still substantially smaller than that of the U.S. We perform multiple...

We study a labor market where firm have private information about their ex-ante heterogeneous productivities and search is random. In this environment, a binding minimum wage can be efficiency-enhancing -- we show that setting it using a version of the Vickery-Clarke-Groves mechanism delivers...

In this paper we show that the relationship between trade liberalization and fi rm productivity is sensitive to the method used to estimate the production function. We estimate the productivity of Colombian manufacturing plants using the methods of Levinsohn and Petrin (2003), Ackerberg, Caves...

We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs' forgone wage in the span-of-control model