This paper uses a model of the valuation of bonds bearing call options, together with observed market yields on callable bonds, to infer information about the uncertainty associated with interest rate expectations. A dynamic programming solution of the model simultaneously determines both the...

The author argues that inequality, combined with only modest growth, can have grave moral consequences. History suggests that, in the past, a rising standard of living has promoted tolerance for others, commitment to economic opportunity, and democracy. But stagnating incomes due to inequality...

A feature of U.S. postwar business cycle experience that is by now widely documented is the tendency of the spread between the respective interest rates on commercial paper and Treasury bills to widen shortly before the onset of recessions. By contrast, the paper—bill spread did not...

The standard workhorse models of monetary policy now commonly in use, both for teaching macro- economics to students and for supporting policymaking within many central banks, are incapable of incorporating the most widely accepted accounts of how the 2007–9 financial crisis occurred and...

This paper outlines an optimization framework which extends the familiar Tinbergen-Theil model in two ways. First, a "piecewise quadratic" replaces the standard quadratic objective function. Second, the time horizon of the optimization becomes, within the context of economic stabilization...