The authors develop a model of costly technology adoption where the cost is irrecoverable and fixed. Households must decide when to switch from an existing technology to a new, more productive technology. Using a recursive approach, the authors show that there is a unique threshold level of...

In the U.S. labor market, the vacancy-unemployment ratio and employment react sluggishly to productivity shocks. The authors show that the job matching model in its standard form cannot reproduce these patterns due to excessively rapid vacancy responses. Extending the model to incorporate sunk...

Regulators express growing concern over “predatory lending,” which we take to mean lending that reduces the expected utility of borrowers. We present a rational model of consumer credit in which such lending is possible, and identify the circumstances in which it arises with and without...

In this study the authors show that during the postwar era, the United States experienced a decline in the share of urban employment accounted for by the relatively dense metropolitan areas and a corresponding rise in the share of relatively less dense ones. This trend, which the authors call...

In the late 1980s, Canada's provinces traded 20 times more with one another than with U.S. states of comparable size and distance. In other words, the Canada-U.S. border exerted a strong effect on the pattern of Canada's continental trade patterns. Since then, globalization and the formation of...