A large amount of recent research in macroeconomics emphasizes the role of uncertainty as a driver of business cycles, but the majority of this work takes uncertainty as exogenous. This paper proposes a model where aggregate uncertainty is endogenously time-varying through financial distress...

In a real business cycle model, an agent's fear of model misspecification interacts with stochastic volatility to induce time varying worst case scenarios. These time varying worst case scenarios capture a notion of animal spirits where the probability distributions used to evaluate decision...

This paper analyzes the impact of the 'one child policy' in China on its household saving behavior. First, it develops a life-cycle model with endogenous fertility, intergenerational transfers and human capital accumulation. We show a macroeconomic and a microeconomic channel of a fall in...

I study a dynamic model of matching between heterogeneous workers and heterogeneous jobs. Workers and jobs are attached to different labor markets, and within each labor market, workers and jobs are assigned to different locations, representing heterogeneity in the skills of workers and the...

The Great Recession of 2007-09 was preceded by sustained period of house price growth that ended in a large aggregate decline of house prices. Our paper evaluates quantitatively the extent to which changes in house prices can explain the drop in consumption witnessed during the Great Recession....

This paper uses plant-level data to document the joint adjustment of capital and employment. The data are analyzed through the lens of a model that integrates features from influential theories of costly capital and labor adjustment. Although the model is rich enough to account for several...

For decades, macroeconomists have searched for shocks that are plausible drivers of business cycles. A recent advance in this quest has been to explore uncertainty shocks. Researchers use a variety of forecast and volatility data to justify heteroskedastic shocks in a model, which can then...

We use an identified factor-augmented vector autoregression (FAVAR) to estimate the impact of monetary policy shocks on the cross-section of stock returns. Our FAVAR combines unobserved factors extracted from a large set of financial and macroeconomic indicators with the Federal Funds rate. We...

We propose an original model of human capital investments after leaving school in which individuals differ in their initial human capital obtained at school, their rate of return, their costs of human capital investments and their terminal values of human capital at retirement. We derive a...

We develop a "passive learning" model of firm entry by spin-off: firm employees leave their employer and create a new firm when (a) they learn they are good entrepreneurs (type I spin-offs) or (b) they learn their employer's prospects are bad (type II spin-offs). Our theory predicts a high...