Ljungqvist and Sargent (2017) (LS) show that unemployment fluctuations can be understood in terms of a quantity they call the "fundamental surplus." However, their analysis ignores risk premia, a force that Hall (2017) shows is important in understanding unemployment fluctuations. We show how...

The impact of recessions on school enrollment is ambiguous. On one hand, recessions might increase the likelihood of enrollment due to decreasing opportunity costs of attending school. On the other hand, recessions might discourage enrollment due to reductions households have in funds available...

Over the past two decades, technological progress has been biased towards making skilled labor more productive. The evidence for this finding is based on the persistent parallel increase in the skill premium and the supply of skilled workers. What are the implications of skill-biased...

Over the past two decades, technological progress has been biased towards making skilled labor more productive. What does skill-biased technological change imply for business cycles? To answer this question, we construct a quarterly series for the skill premium from the CPS and use it to...

Fertility in the US exhibits an increasingly more procyclical pattern. We argue that women's breadwinner status is behind procyclical fertility: (i) women's relative income in the family has increased over time; and (ii) women are more likely to work in relatively stable and countercyclical...

The impact of recessions on school enrollment is ambiguous. On one hand, recessions might increase the likelihood of enrollment due to decreasing opportunity costs of attending school. On the other hand, recessions might discourage enrollment due to reductions households have in funds available...

This paper first documents the increase in the time lag with which labor input reacts to the economy's driving structural shocks ("the labor adjustment lag") that is visible in US data since the mid-1980s. We show that lagged labor adjustment is optimal in a setting where there is uncertainty...

The COVID-19 crisis may have widely and permanently altered the labor market through the demand for skills. Crises tend to accelerate technological change. Previous recent crises were characterized by an acceleration of automation, which generally led to a decrease in middle-income jobs with...

Using the Reserve Bank of Australia's MARTIN model we compare actual monetary policy decisions to a counterfactual in which the cash rate is set according to an optimal simple rule. We find that monetary policy played a crucial role in avoiding a potential recession in 2001 and mitigating the...

Using the Reserve Bank of Australia's MARTIN model we compare actual monetary policy decisions to a counterfactual in which the cash rate is set according to an optimal simple rule. We find that monetary policy played a crucial role in avoiding a potential recession in 2001 and mitigating the...