Job polarization is a widely documented phenomenon in developed countries since the 1980s: employment has been shifting from middle to low- and high-income workers, while average wage growth has been slower for middle-income workers than at both extremes. We document 1) that polarization has...

The use of large datasets for macroeconomic forecasting has received a great deal of interest recently. Boosting is one possible method of using high-dimensional data for this purpose. It is a stage-wise additive modelling procedure, which, in a linear specification, becomes a variable selection...

We study the loss function of 15 European governments as implied by their budget balance forecasts. Results suggest that the shape of the loss function varies across countries. The loss function becomes more asymmetric as the forecast horizon increases and in advance of parliamentary election....

We examine the behavior of forecasts for real GDP growth using a large panel of individual forecasts from 30 advanced and emerging economies during 1989-2010. Our main findings are as follows. First, our evidence does not support the validity of the sticky information model (Mankiw and Reis,...

It is common practice to estimate the volatility-growth link by specifying a standard growth equation such that the variance of the error term appears as an explanatory variable in this growth equation. The variance in turn is modelled by a second equation. Hardly any of existing applications of...

We analyze the di fferential growth e ffects of basic research, applied research, and embodied human capital accumulation in an R&D-based growth model with endogenous fertility and endogenous education. In line with the empirical evidence, our model allows for i) a negative association between...

This paper shows that the consumption-based asset pricing model (C-CAPM) with low-probability disaster risk rationalizes large pricing errors, i.e., Euler equation errors. This result is remarkable, since Lettau and Ludvigson (2009) show that leading asset pricing models cannot explain sizeable...

We study the effects of a labor-intensive health care sector within an R&D-driven growth model with overlapping generations. Health care increases longevity and labor participation/productivity. We examine under which conditions expanding health care enhances growth and welfare. Even if the...

Growth is associated with (i) shifts in the sectoral structure of the economy, (ii) changes in relative prices and (iii) the Kaldor facts. Moreover, (iv) cross-sectional data shows systematic differences in the expenditure structure across income groups. This paper presents a growth model which...

The determinants of the direction of technical change and the implications for economic growth are studied in the one-sector neoclassical growth model of Ramsey (1928), Cass (1965), and Koopmans (1965) extended to allow for endogenous capital- and labor-augmenting technical change. For this...