For more than half a century, inventory investment has attracted wide attention as a major cause of short-term macroeconomic fluctuations, and the mechanisms involved have been the focus of many major studies. Yet microeconomists and business people familiar with corporate behavior have...

Using a dynamic factor model that allows for changes in both the long-run growth rate of output and the volatility of business cycles, we document a significant decline in long-run output growth in the United States. Our evidence supports the view that most of this slowdown occurred prior to the...

We study the e¤ects of underground activities on labour market dynamics in a RBC model with search frictions in the labor market, bargained wage and quadratic hiring costs. Underground activities, which allow agents to (partially) evade taxes, are modelled through a moonlighting production...

We estimate the role of news shocks to total factor productivity, foreign interest rates and commodity terms of trade in explaining the variance of output and other macro aggregates in a large sample of countries. To correct for the small-sample bias of the variance decomposition estimates we...

This paper recognizes the importance of a large informal economy and interest rate fluctuations for business cycles in emerging countries. I document (1) a positive relationship between the relative volatility of consumption to output and the size of the informal economy, and (2) countercyclical...

What is the role of formal labor market institutions in the impact of crises on wages and employment? We study wage adjustment during the recent crisis in Italy's regulated labor market using the unregulated informal labor market as a counterfactual. We use a unique dataset on immigrant workers...

A vast literature has focused on what causes businesses to move into informality and what is the impact of an enlarging informal sector on growth. This paper shows that the size of the informal economy also affects business cycle volatility. Informal businesses are usually small in size, which...

We shed light on the driving forces behind unemployment fluctuations and short-run changes in the informality rate on the Argentine labor market. Using Argentine survey data, we measure worker flows between formal employment, informal employment, unemployment and non-participation. We propose a...

Using data from the Italian Institute of Statistics, I examine the cyclical properties of three labor inputs - regular employees, regular self-employed, and underground workers. Results support the widespread view that, in Italy, the shadow employment functions as an improper tool for increasing...

This paper introduces a comprehensive database of informal economic activity. The database focuses on measures that have strong cross-country and over time coverage: it includes both model-based and survey-based measures of informality and covers more than 160 economies for the period 1990-2018....