In this paper we study the impact of moral hazard in labor contracts on the cross-sectional wage distribution, in particular, its effect on the extent of residual wage inequality. The tool of our analysis is a search model with job-to-job mobility and firm competition for workers. In our...

This paper develops a model of optimal government debt maturity in which the government cannot issue state-contingent bonds and the government cannot commit to fiscal policy. In contrast to an environment with full commitment, there is a tradeoff between the cost of funding and the benefit of...

I study the implications of fluctuations in new firm creation across industries for asset prices and macroeconomic quantities. I write a general equilibrium model with heterogeneous industries, allowing for firm entry and time variation in markups. Firms entering an industry increase competition...

This paper presents a model of human capital accumulation to better understand the take-off from stagnation to growth from 1500 to 2000 AD. Finitely lived households choose the quantity and quality of children. The key ingredient of the model is a spillover from parents to children in the...

We present an envelope theorem for establishing first-order conditions in decision problems involving continuous and discrete choices. Our theorem accommodates general dynamic programming problems, even with unbounded marginal utilities. And, unlike classical envelope theorems that focus only on...

What do changes in sectoral/regional productivity look like? How do they aggregate up? In this study we quantify the importance of sectoral and regional propagations of disaggregated changes in productivity. To do so, we use a multi-region, multi-sector model to identify the changes in sectoral...

This paper investigates how political incentives affect the allocation of public goods using data from Brazil's Federal Legislature, a setting in which federal politicians representing multi-member districts can issue budgetary amendments for public works in their respective districts. We...

Using micro-data from 48 developing countries, this paper studies changes in cross-sectional patterns of fertility and child investment over the course of the demographic transition. Before 1960, children from larger families obtained more education, in large part because they had richer and...

We develop a theoretical framework to quantitatively assess the general equilibrium effects and welfare implications of central bank reputation and transparency. Monetary policy alternates between periods of active inflation stabilization and periods during which the emphasis on inflation...

Though risk aversion and the elasticity of intertemporal substitution have been the subjects of careful scrutiny when calibrating preferences, the long-run risks literature as well as the broader literature using recursive utility to address asset pricing puzzles have ignored the full...