Purpose: We augment an otherwise standard business cycle model with a rich government sector, and add monopolistic competition in the product market, and rigid prices, as well as rigid wages a la Calvo (1983) in the labor market.Purpose: We augment an otherwise standard business cycle model with...

More debt forgiveness directly benefits households but indirectly makes credit more expensive. How does aggregate risk affect this trade-off? In a calibrated general equilibrium life-cycle model, aggregate risk reduces the welfare benefit of making default very costly when the costs are borne by...

This paper seeks to develop an optimal fiscal policy rule for the Colombian economy that interacts with the monetary policy in order to stabilize the product and inflation gap. It proposes a Dynamic Stochastic General Equilibrium model (DSGE) with nominal rigidities and proposes a fiscal rule...

We augment an otherwise standard business cycle model with a richer government sector, and add monopolistic competition in the product market, and rigid prices, as well as rigid wages a la Calvo (1983) in the labor market. This specification with the nominal wage rigidity, when calibrated to...

We study how aggregate volatility is influenced by the propagation of idiosyncratic shocks across firms through the network of ownership relations. We use detailed data on cross-holdings as well as the relevant balance sheet information for almost the entire universe of Italian limited liability...

We present a model of aggregate fluctuations in which monopolistic firms face sunk costs to enter the production process and labor markets are characterized by search and matching frictions. Entrants post vacancies and are matched to idle workers. Our specification of sunk costs gives rise to a...

Higher oil-price shocks benefit unskilled workers relative to skilled workers: At the business-cycle frequency, energy prices and the skill premia display a strong, negative correlation. We assess the robustness of this negative correlation using several methods and data sources, including...

This paper is concerned with the business cycle dynamics in search-and-matching models of the labor market when agents are ex post heterogeneous. We focus on wealth heterogeneity that comes as a result of imperfect opportunities to insure against idiosyncratic risk. We show that this...

This paper analyzes the effects of short-time work (i.e., government subsidized working time reductions) on unemployment and output fluctuations. The central question is whether the rule based component (i.e., the existence of the institution short-time work) and the discretionary component...

We incorporate remittances and microentrepreneurship (self-employment) into a small openeconomy business cycle model with capital and labor market frictions. Countercyclical remittances moderate the decline of households' consumption during recessions. These remittances also are used to finance...