The search-and-matching model of the labor market fails to match two important business cycle facts: (i) a high volatility of unemployment relative to labor productivity, and (ii) a mild correlation between these two variables. We address these shortcomings by focusing on technological...

This paper develops a simple life-cycle model that embeds a theory of debt restrictions based on the existence of inalienable property rights a la Kehoe and Levine [1993. Debt constrained asset markets. Review of Economic Studies 60(4), 865-888; 2001. Liquidity constrained markets versus debt...

We use a very standard life-cycle growth model, in which individuals have a labor-leisure choice in each period of their lives, to prove that an optimizing government will almost always find it optimal to tax or subsidize interest income. The intuition for our result is straightforward. In a...

In this paper, we document some features of the distribution of income, consumption and wealth in Canada using survey data from many different sources. We find that wage and income inequality have increased substantially over the last 30 years, but that much of this rise was offset by the tax...

Why is unemployment higher for young individuals than for the old? Why are business cycle fluctuations in employment more pronounced for the young than for the old? We address these questions in the context of a search-and-matching model of the labor market that features learning about...