In this paper we show the quantitative importance of the process that determines changes in family composition to determine the main macroeconomic magnitudes. We do so by modelling family type as a stochastic process that affects households in a way similar to shocks to earnings. Agents respond...

Do the implications for business cycle issues change when we switch from studying infinitely-lived, representative-agent models to more sophisticated demographic structures with finitely-lived agents? This article addresses that question by using a large, overlapping-generations model that is...

This paper studies the implications of taxing overtime work to reduce the workweek. We study the roles played by team work, commuting costs and idiosyncratic output risk in determining the choice of the workweek. To obtain reliable estimates, we calibrate the model to the substitutability...

We propose a theory of unsecured debt that is based on the existence of private information about a person's type and on the fact that some debtors have the incentive to forego bankruptcy in order to signal their type. The theory formalizes the idea that the type of a person is relevant to...

In this paper we address the time-inconsistency of optimal debt policy—the incentive for a current government to “manipulate interest ratesâ€â€”raised in Lucas and Stokey’s celebrated 1983 paper. The literature that followed suggested various ways to fully overcome...

We revisit the issue of the usefulness of Social Security when there are frictions that prevent the existence of a fluid market for annuities. We model households as families and not as individual agents which provides a rationale for the existence of life insurance. Moreover, our structure also...

To what extent do imbalances in the ratio of men to women in the population account for the historical trends in marriage and divorce? To answer this question, we build a model of marriage with two main features. First, there exists asymmetry across men and women with respect to the length of...