This paper models the dynamics of fundraising, campagin spending, and accumulation of war chest in the context of U.S. House elections. We structurally estimate the model using campaign finance data and vote share data from 1984 to 2004. A salient feature of U.S. Congressional Elections is that...

This paper analyzes the incentives to strategically default in a dynamic principal-agent model with hidden savings and one-sided limited commitment. The agent's outside option depends on the hidden savings, therefore the principal cannot observe the agent's incentives to default. The agent has a...

We study, empirically and theoretically, the flows from and to unemployment, and from job to job, and relate these to occupational mobility. We are also particularly interested in the cyclical patterns of these flows. Using the Survey of Income and Program Participation, we document patterns of...

This paper explores how banks' balance sheets and sovereign risk affect macroeconomic fluctuations jointly. The heightened sovereign risk and a potential default constrain the banks' ability to extend credit to firms. This happens through the capital requirement that limits the size of the bank...

This paper develops a simple model in which uncertainty about future tax policy leads to a temporary reduction in investment. The basic idea is that policy uncertainty creates uncertainty about the profitability of investment. If the uncertainty is likely to be resolved in the not-too-distant...

This paper presents a parsimonious equilibrium business cycle model with trade frictions in the product and labor markets. The model features unemployment and unsold production and its general equilibrium can be represented very simply: as the intersection of an aggregate supply and an aggregate...

Taking a look at sectoral macroeconomic data, this paper motivates the importance of (i) structural change, (ii) biased technical change and (iii) non-homotheticity of preferences. We provide a tractable theory of directed technical change where households have non-homothetic preferences and...

This paper examines the optimal design of recommendation systems. Given the option value of experimentation, short-run consumers' incentives to experiment are too low; the social planner can encourage experimentation by providing selective information to the consumers, in the form of a...

We show that the organization of production among firms in an economy has important implications for the impact of financial frictions. We set up a model in which firms use output of other firms as inputs for their own production. We allow for arbitrary network structures such that aggregate...

This paper investigates how features of the business cycle interact with technological restrictions at the firm level to generate dispersion in marginal products of ex ante identical firms. The model is able to deliver a non-monotonic relationship between dispersion in marginal products,...