Recent work by Laibson (1997) identifies that individuals’ time discount factors evolve over time. This leads to a time-inconsistency problem in which savings are distorted. This paper studies the long-run effects of inflation in the presence of a time-inconsistency problem.

In this article, we examine the impact of financial market development on the level of economic development. In particular, we explore this issue in a setting where individuals face idiosyncratic risk. Incomplete information also provides a transaction role for money so that monetary policy can...

We examine the relationship between housing equity and wage earnings. We first provide a simple model of wage bargaining where failure leads to both job loss and mortgage default. Moreover, foreclosure generates disutility beyond selling a home. We test this prediction using nine waves of the...

The effects of monetary policy vary significantly across countries. In particular, recent empirical work finds evidence of a Tobin effect in high income countries and a reverse Tobin effect in less developed economies. We present a neoclassical growth model where money is required for investment...

The Internet, a system of interconnected computer networks primarily in the USA, can be seen as an experiment in the development, deployment and use of high-speed networks, and as such can provide guidance for the shaping of the future national telecommunications infrastructure. Internet's...

We examine the relationship between housing equity and wage earnings using nine waves of the national American Housing Survey from 1985 to 2003. Employing a rich set of time and place controls, a synthetic mortgage instrumental variable strategy, and a first difference estimator we find that...

The primary objective of this paper is to study the interaction between monetary policy, asset prices, and the cost of capital. In particular, we explore this issue in a setting where individuals face idiosyncratic risk. Incomplete information also provides a transactions role for money so that...

This paper develops a general equilibrium monetary model with performance incentives to study the inflation-unemployment relationship. A long-run downward-sloping Phillips curve can exist with perfectly anticipated inflation because workers’ incentive to exert effort depend on financial market...

A popular and long-standing view is that social security is a means for young, unemployed people to "purchase" jobs from older workers. Can social security, by encouraging retirement and hence creating job vacancies for the young, improve the allocation of workers to jobs? Maybe, according to a...

We construct a monetary economy in which agents face aggregate demand shocks and heterogeneous idiosyncratic preference shocks. We show that, even when the Friedman rule is the best interest rate policy the central bank can implement, not all agents are satiated at the zero lower bound and...