A striking fact about pricing is the prevalence of \sales": large temporary price cuts followedby prices returning exactly to their former levels. This paper builds a macroeconomic modelwith a rationale for sales based on firms facing customers with different price sensitivities.Even if firms...

Building a model with three imperfect markets – goods, labor and credit – representing aproduct’s life-cycle, we find that goods market frictions drastically change the qualitative andquantitative dynamics of labor market variables. The calibrated model leads to a significantreduction in...

We estimate the effects of labor market entry conditions on wages for male individuals firstentering the Austrian labor market between 1978 and 2000. We find a large negative effect ofunfavorable entry conditions on starting wages as well as a sizeable negative long-run effect.Specifically, we...

We extend the Carlstrom and Fuerst (American Economic Review,1997, 87, pp. 893–910) agency cost model of business cycles by includingtime-varying uncertainty in the technology shocks that affectcapital production. We first demonstrate that standard linearizationmethods can be used to solve the...

In the data, individual prices change frequently and by large amounts. In standardsticky price models, frequent and large price changes imply a fast response of the aggregate price level to nominal shocks. This paper presents a model in which price setting firms optimally decide what to observe,...

This paper considers the problem of determining the extent of any state dependen-cies in women's labor supply behavior. Employment outcomes are modeled using adynamic multinomial choice framework including persistent unobserved heterogeneitywith a relatively general distribution. In order to...

In recent policy debates some have argued that expansionary monetarypolicy in Japan can increase real output in Japan and in Japans neighbors,while others have warned that it is a beggar-thy-neighbor policy. In this paper weestimate structural vector autoregressions to assess the effects of...