Empirical evidence suggests that there is a long lag between the time a new technology is introduced and the time at which it is widely adopted. The conventional wisdom is that these observations are inconsistent with the predictions of the frictionless neoclassical model. In this paper we show...

We discuss a simple model of intergenerational transfers with one-sided altruism: parents care about their child but the child does not reciprocate. Parents and children make investments in the child's education, investments for other purposes, and parents can transfer cash to their child. We...

This paper examines the degree to which Americans are saving optimally for retirement. Our standard for assessing optimality comes from a life-cycle model that incorporates uncertain lifetimes, uninsurable earnings and medical expenses, progressive taxation, government transfers, and pension and...

This paper examines the effects of children on consumption and wealth. To anchor intuition, we develop implications using a simple permanent income model with no uncertainty and complete markets. But this framework does not come close to matching the distribution of existing wealth. We therefore...

Common financial planning advice calls for households to ensure that retirement income exceeds 70 percent of average pre-retirement income. We use an augmented life-cycle model of household behavior to examine optimal replacement rates for a representative set of retired American households. We...

Empirical evidence suggests that there is a long lag between the time a new technology is introduced and the time at which it is widely adopted. The conventional wisdom is that these observations are inconsistent with the predictions of the frictionless neoclassical model. In this paper we show...

This paper uses repeated cross-sectional data from the Surveys of Consumer Finances (SCF) to characterize cohort patterns of net worth and debt of American households. Cohort patterns provide a useful benchmark for identifying potentially vulnerable households based on relative financial...

We analyze long-span data on real interest rates and productivity growth with the focus on estimating their long-run correlation. The evidence points to a moderately negative correlation, meaning that real interest rates are mildly countercyclical, although the estimates are not precise. Our...