In this paper, we incorporate a price search decision into a life cycle model and differentiate consumption from expenditure. Consumers with low wealth and bad income shocks search more for cheaper prices and pay less, which makes their consumption higher than in a model without search option. A...

We extend the standard Eaton and Gersovitz (1981) sovereign default model to study bailout policies. In our setup a country that concentrates a significant fraction of bond holders decide on a period by period basis whether to bailout a debtor government. The combination of bailout policies and...

After two types of inflation uncertainty are derived within a time-varying parameter model with GARCH specification, the relationship between inflation uncertainty and interest rates for safe assets is investigated. The results support the existence of a ‘‘flight to quality’’ effect.

Search theory routinely assumes that decisions about the acceptance/rejection of job offers (and, hence, about labor market movements between jobs or across employment states) are made by individuals acting in isolation. In reality, the vast majority of workers are somewhat tied to their...

Search theory routinely assumes that decisions about the acceptance/rejection of job offers (and, hence, about labor market movements between jobs or across employment states) are made by individuals acting in isolation. In reality, the vast majority of workers are somewhat tied to their...

Between 1980 and 2005, the incarceration rate in the United States increased fourfold. At this level, 6.6% of the population will be imprisoned for a year or more during their lifetime. We provide a comprehensive analysis of the eects of increased incarceration rates on all actors in labor...

This paper focuses on how to obtain numerical solutions to emerging-market DSGE models with occasionally binding constraints by using the Euler equation, rather than using value functions of households. The main point is that the Euler-equation approach works in a fast and simple way for a...

In this paper, we study the interaction between self insurance and public insurance. In particular, we provide evidence on a negative correlation between unemployment insurance benefits and home production using the American Time Use Survey (ATUS) and the state-level unemployment insurance data...

In this paper, we study the interaction between self insurance and public insurance. In particular, we provide evidence on a negative correlation between unemployment insurance benefits and home production using the American Time Use Survey (ATUS) and the state-level unemployment insurance data...

The job-search problem of couples differs in significant ways from that of singles. We characterize the reservation wage strategies of a couple that perfectly pools income to understand the ramifications of joint search for individual labor market outcomes. Two cases are analyzed. First, when...