Anthony A. Smith

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How do movements in the distribution of income and wealth affect the macroeconomy? We analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity. Our main finding is that, in the stationary stochastic equilibrium, the behavior of the macroeconomic(More)
We derive asset-pricing and portfolio-choice implications of a dynamic incomplete-markets model in which consumers are heterogeneous in several respects: labor income, asset wealth, and preferences. In contrast to earlier papers, we insist on at least roughly matching the model’s implications for heterogeneity—notably, the equilibrium distributions of(More)
We consider a representative-agent equilibrium model where the consumer has quasi-geometric discounting and cannot commit to future actions. We restrict attention to a parametric class for preferences and technology and solve for time-consistent competitive equilibria globally and explicitly. We then characterize the welfare properties of competitive(More)
The sensitivity of U.S. aggregate investment to shocks is procyclical: the response upon impact increases by approximately 50% from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lumpy microeconomic capital adjustment. Beyond explaining this specific time variation, our model and evidence(More)
We investigate the welfare effects of eliminating business cycles in a model with substantial consumer heterogeneity. The heterogeneity arises from uninsurable and idiosyncratic uncertainty in preferences and employment status. We calibrate the model to match the distribution of wealth in U.S. data and features of transitions between employment and(More)
We study the evolution of individual labor earnings over the life cycle using a large panel data set of earnings histories drawn from U.S. administrative records. Using fully nonparametric methods, our analysis reaches two broad conclusions. First, earnings shocks display substantial deviations from lognormality—the standard assumption in the incomplete(More)
This paper discusses methods for reducing the bias of consistent estimators that are biased in nite samples. These methods are available whenever the bias function, which relates the bias of the parameter estimates to the values of the parameters, can be estimated by computer simulation or by some other method. If so, bias can be reduced by one full order(More)
In this paper we attempt to (i) extend the competitive equilibrium neoclassical growth model to incorporate consumer preferences that feature temptation and selfcontrol as in the framework developed by Gul and Pesendorfer; (ii) use the model to analyze taxation and welfare; and (iii) extend and specialize the Gul-Pesendorfer temptation formulation to be(More)